Golden Parachutes

October 30, 2008
By Caroline Ayanian, Wayland, MA

Somewhere in America, the nation celebrated for its equality and prosperity, a mother packs the last of her and her daughter’s possessions. She grasps the pale blue 1999 photo album of the year they moved here. She situates it beside Alice in Wonderland and her daughter’s patched, first teddy bear. She struggles every day to manage her frustration and depression. After she couldn’t pay the mortgage last month, the bank had foreclosed on her house. For this, she can thank the malevolent senior executives at her old job, who received more than 100 times what she makes in a year, for being laid off.

Meanwhile, a recently fired CEO relaxes on a Maui beach with an apple martini in his hand and the crashing waves in his ear. He stands and strolls back to his new, five-bedroom beach house. Even though it doesn’t seem right to be retired already, he is doing well, and isn’t complaining.
A golden parachute is a slang word for a severance agreement between a corporation and a CEO or other senior executive. The severance payment can be as much as 50 million. With senior executives receiving, but not earning, these massive payments, a sense of unfairness and inequality is generated. These severance payments aren’t only un-American but take some motivation out of their drive. Even though the recipients of golden parachutes receive additional money when their company is thriving, they will be far from devastated if they fail at their job. Therefore, they may make unnecessary risks, resulting in financial losses for the corporation.

When this occurs to multiple companies at once, the effect propels Wall Street into a descending spiral, as encountered during the September through October recession when the stock market plunged over 40%. Stockholders lose money as their stocks’ value plummets. Businesses are forced to raise prices just to avoid bankruptcy.

Even though stockholders are hit badly, the people who are hit the hardest by the consequences of golden parachutes are the workers who live paycheck to paycheck. To CEOs and executives, a loss of thousands of dollars could mean one instead of two summerhouses, but to those who just barely get by, losses of that magnitude can be devastating. The CEOs who run their businesses into the ground don’t think about how many lives they effect. This injustice is a spreading problem all across America and should be fixed immediately.

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This article has 1 comment.

m-ianz said...
on Dec. 12 2008 at 2:31 am
what a FABULOUS piece of american literature


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