Rules of Golden Parachute
Golden parachutes are based on rules and regulations to prevent leaders from using their power and paying more than leaders. Important rules and considerations include:
1. Tax Consequences: If the amount paid under the cremation arrangement exceeds certain limits, tax duty will be charged by the Internal Revenue Code (IRC). This excise tax is designed to prevent excessive compensation.
2. Authorisation Approval: In most cases, business owners must agree to install a gold ceiling, especially in large cases. Business owners can raise concerns about executive pay at shareholder meetings.
3. Disclosure Requirements: Public companies must disclose details of golden parachute agreements in their licenses so that shareholders understand the details of these arrangements.