Eli5: How do CEOs from failing companies bail out with golden parachutes? Where does the money come from?

Question

Eli5: How do CEOs from failing companies bail out with golden parachutes? Where does the money come from?

In: Economics

Answer 1

I think the answers here confuse two things: the guaranteed portion of the employment contract (barring for-cause termination) and compensation in a change of control event. A “golden parachute” specifically refers to a change of control event.

In theory, an acquisition will tend to be loved by shareholders but put the executives out of a job. Again in theory, executives will have an opposing incentive to shareholders.