A golden parachute agreement is a contractual provision in an employment agreement that provides financial benefits or severance pay to a senior executive if their employment is terminated under certain circumstances. These agreements are typically designed to protect the executive`s financial interests in the event of a merger, acquisition, or other change in control of the company.
Golden parachute agreements may include a variety of terms and conditions, including the amount of severance pay, the circumstances under which the agreement will be triggered, and the duration of the benefits. The specific terms of the agreement will vary depending on the company and the executive involved.
Here is a sample golden parachute agreement that outlines the basic terms of the agreement:
Agreement Title: Golden Parachute Agreement
Parties Involved: [Name of Executive] and [Name of Company]
Background: [Provide a brief background on the executive`s role in the company and their responsibilities]
Purpose: The purpose of this agreement is to provide financial protection to the executive in the event of a change in control of the company.
Terms and Conditions:
1. Severance Pay: In the event of a change in control of the company, the executive shall be entitled to receive [Insert amount of severance pay] in cash as severance pay. This amount shall be paid in a lump sum within [Insert number of days] days of the effective date of the change in control.
2. Triggering Event: This agreement shall be triggered in the event that the executive`s employment is terminated within [Insert number of months/years] following a change in control of the company, either by the company or the executive for reasons other than gross misconduct.
3. Non-Compete: In consideration for the severance pay, the executive agrees to a non-compete provision for [Insert number of months/years] following their termination. This non-compete provision shall apply to the executive`s participation in a competing business within [Insert geographic scope] of the company`s business.
4. Benefits: The executive shall be entitled to receive any benefits, including health insurance or retirement benefits, to which they are entitled under the company`s benefit plans for [Insert number of months/years] following their termination.
5. Governing Law: This agreement shall be governed by the laws of [Insert governing law].
6. Entire Agreement: This agreement constitutes the entire agreement between the parties and supersedes all prior negotiations, understandings, and agreements between them.
A golden parachute agreement is a way to provide financial protection to senior executives in the event of a change in control of the company. While the terms of the agreement will vary depending on the company and the executive involved, a sample agreement can provide a useful starting point for negotiating the specific terms of the agreement. As always, it is important to consult with legal and financial advisors before entering into any contractual agreement.