Golden Parachutes and Board of Director Fiduciary Duty

This paper finds that CEO tenure for firms that adopt golden parachutes is significantly lower than that of nonadopting firms. These CEOs are frequently hired subsequent to control activity such as financial distress, takeover contests, or proxy fights. In the eighties, boards of directors had to include these agreements into employment contracts in order to attract executives from outside their firms. During that period, firms that adopted golden parachutes had a higher likelihood of being future takeover targets