July 26, 2023
The Boston Business Journal recently published an article featuring Charles Tharpe, Associate Professor of Management and Organizations, discussing severance packages and ‘golden parachutes’ given to certain Massachusetts CEOs.
Executives who are let go as a result of corporate takeovers typically receive severance packages and golden parachutes exceeding millions as insurance if they lose their jobs. A typical severance package can reach a staggering amount; Lawrence Culp, the CEO of GE, recently received a package close to $58 million.
Tharpe explains, “It’s like homeowners’ insurance in a way, that hopefully you never use it and you rarely use it. This is a hypothetical number. Unless you’re fired, you don’t get it. It helps facilitate the changing when you need to change, because it’s an accepted, known process.”
Tharpe shares that these packages help attract top candidates, just as a high salary normally would. He also notes that when a company or its CEO wants to part ways with the other, severance packages make it a quicker and easier process.