- A “golden parachute” historically is a payment triggered by a company takeover that an executive receives upon exiting.
- Today, the term is being used more liberally to describe any kind of severance payment an executive receives after leaving a firm (even when the person’s performance has been subpar).
- WeWork cofounder Adam Neumann is reportedly getting $1.7 billion for stepping down as the company’s chairman after its biggest investor, SoftBank, took over the flailing company in October 2019.
- Other major executives who have received multimillion-dollar golden parachutes include Marissa Mayer (Yahoo), Philippe Dauman (Viacom), and Andy Rubin (Google).
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Adam Neumann stepped down as chairman of WeWork on Tuesday as the Japanese investor SoftBank took over the troubled company. SoftBank is giving Neumann $1.7 billion ($1 billion for stock Neumann will sell, a $185 million consulting fee, and $500 million in credit) for leaving his post, according to The Wall Street Journal.
The $1.7 billion payout can be seen as a “golden parachute.”
Historically, a golden parachute referred to payment a top executive received upon exiting a firm as a result of a merger or acquisition. Today, however, the term is being used more liberally.
Peer Fiss, a department chair at the University of Southern California’s Marshall School of Business who wrote a study titled “How Golden Parachutes Unfolded,” talked to Business Insider about the evolving definition of the golden parachute.