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

Answer: Departure compensation is usually in their employment contract or inserted by the board, as a retention agreement, before a transaction, expansion, or closure occurs.

Investors, lenders, acquiring companies, and employees each have different reasons for wanting executive continuity during tumultuous times.

The funding can come from a number of places, including free cash, cash reserves, transaction proceeds, or debt notes.