A golden parachute is a contractual, often substantial, payment made to an executive upon termination of their role following a change of control of the company, typically an acquisition or merger. It is set out in the employment or corporate mandate contract.

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It protects the executive and aligns their interests with completing a value-creating deal, but can also be a charge to factor into the valuation and a negotiation point between seller and buyer. In Switzerland, golden parachutes at listed companies have been regulated since the Minder initiative (2013).

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Example: a target's CEO holds a golden parachute equal to 24 months of remuneration, CHF 800,000, triggered by the change of control. The buyer factors this charge into its analysis of the real cost of the deal and of management continuity.

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At Hectelion, we identify golden parachutes and other executive commitments in our due diligence and valuation work.