TLDR:
A golden parachute is a lucrative compensation package for senior executives that is triggered upon termination following a company acquisition or merger, designed to attract and retain top talent.
Shareholder and Board Reactions to Golden Parachutes
Golden parachutes are frequently controversial with shareholders because they can create perverse incentives — executives may be motivated to support an acquisition (which triggers their parachute) even when doing so isn’t in shareholders’ best interests. In the US, say-on-pay “golden parachute” advisory votes are required for public companies under the Dodd-Frank Act, though these votes are non-binding. Proxy advisory firms like ISS and Glass Lewis routinely recommend “against” excessive golden parachute packages, and large institutional shareholders increasingly vote against such arrangements.