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The first use of the term "golden parachute" is credited to a 1961 attempt by
creditors to oust Howard Hughes from control of Trans World Airlines. The
creditors provided Charles C. Tillinghast Jr. an employment contract that
included a clause that would pay him money in the event that he lost his job.
The use of golden parachutes expanded greatly in the early 1980s in
response to the large increase in the number of takeovers and mergers.
In Europe the highest "change-in-control benefits" have been for French
executives, as of 2006 according to a study by the Hay Group human
resource management firm. French executives receive roughly the double of
their salary and bonus in their golden parachute.
News reference volume of the term "golden parachute" spiked in late 2008
during the global economic recession, and 2008 US Presidential
Debates.Despite the poor economy, in the two years before 2012 a study by
the professional services firm Alvarez & Marsal found a 32% increase in the
value of "change-in-control benefits" provided to US executives. In late
2011, USA Today reported several CEO retirement packages in excess of
$100 million, "raising eyebrows even among those accustomed to oversized
In the 1980s, golden parachutes prompted shareholder suits challenging the
parachutes' validity, SEC "termination agreement disclosure rules" in 1986,
and provisions in the Deficit Reduction Act of 1984 aimed at limiting the size
of future parachutes[8] with a special tax on payouts that topped three times
annual pay. In the 1990s in the United States, some government efforts were
made to diminish "change-in-control benefits". As of 1996, Section 280G of
the Internal Revenue Code denies a corporation a deduction for any excess
"parachute payment" made to a departing employee, and Section 4999
imposes on the recipient a nondeductible 20% excise tax, in addition to
regular income and Social Security taxes. The ideas being the expenses are
in excess of reasonable compensation for personal services.
The 2010 United States Dodd-Frank Act includes in its provisions a mandate
for shareholder votes on any future adoption of a golden parachute by

publicly traded firms. In Switzerland, a referendum which "would give

shareholders the power to veto executive pay plans, including golden
parachutes" was put to a vote on March 3, 2013. Voters in
Switzerland passed measures limiting CEO pay and outlawing golden
parachutes in Swiss referendum, 2013.
Heinz CEO Could Score One Of The Most Lucrative Golden
Parachutes In History
Warren Buffet's $28 billion deal to buy Heinz will be very good indeed for the
company's current CEO. SEC filings reveal that William Johnson could walk
away from the buyout, and the company, with more than $200 million.
Even by the inflated standards of CEO exit packages, that's quite a sum.
According to The Wall Street Journal, it would be among the 10 largest in
history. There have been only six other packages worth more than $200
By way of comparison, former Tyco CEO Edward Breen recently received
around $150 million for helping rebuild the company after a series of
Should he decide to leave, Johnson is due $56 million in "bonuses and other
awards" related to the completion of the deal and $56 million in deferred
compensation. He'd also have shares worth $99.7 million for a grand total
of $212.7 million.
Johnson may agree to stay, but 3G Capital, Buffet's partner in the
deal,replaced the CEO at Burger King after a 2010 deal to buy out the
company. He's also 64, making this a pretty appealing time to retire.
Heinz has performed well under Johnson, but giant exit packages have been
known to backfire. Recently, departing Novartis chairman Daniel Vasella was
offered $78 million as part of a non-compete exit agreement. The outrage
over the package was so great that the company had to withdraw it. It also

helped rally support behind a Swiss bill that gives shareholders greater say
over executive pay.
Carly Sneed Fiorina
With Fiorina as chairman and CEO, Hewlett-Packard's value declined
significantly and the technology giant endured massive layoffs. Fiorina led a
largely unsuccessful merger with Compaq in 2002, going against the wishes
of company founder Walter Hewlett. Asked by the board of directors to step
down in 2005, Fiorina left with $21 million in cash, plus stock and pension
benefits worth another $19 million. According to HP executive compensation
rules, departing executives are entitled to no more than 2.99 times their
base salary; anything more requires stockholder approval. Fiorina's
parachute was more than that, so the stockholders filed a class action suit (a
federal judge dismissed it in April 2008).