Sawers McFarlane

» Calgary Employment Lawyers

Golden Parachute Claims - Sawers McFarlane

Don’t Leave With Less Than You Deserve

It’s common practice for companies big and small to change leaders or merge with other companies, resulting in dramatic staff changes from the top down. Unfortunately, job redundancy and shifts in company structure can result in the loss of jobs. When key executives are terminated, they are often provided with a “golden parachute,” or a generous severance package of salary and benefits. Chances are if you’re in a senior position with a company, you are instrumental in its day-to-day processes and successes, and as such deserve to be protected in the event of a worst-case scenario. Engaging your company in negotiations to secure a golden parachute requires a dedicated employment lawyer who will work to maximize your severance package and ensure that your rights are protected.

How Does a “Golden Parachute” Work?

More commonly known as a change-of-control agreement, golden parachutes are set in motion by a company’s board of directors and executed when you’re terminated as a result of mergers or changing ownership. Depending on the laws in the province in which your company is incorporated, creating this agreement may require shareholder approval.

Though the agreement is designed to compensate executives who lose their jobs due to a reduction in power or a title change following a corporate shift, in some cases – like when a certain percentage of corporation stock is acquired by one person or a group – the parachute may be triggered even if your position does not change completely.

Historically, golden parachutes have been justified on three different grounds: First, they allow corporations that may be prime targets for takeover to hire and retain quality executives who might otherwise be reluctant to work in such a precarious situation. Second, they add to the cost of acquiring a corporation, effectively discouraging takeover bids. Finally, if such a bid does occur, executives with a golden parachute agreement are more likely to respond in a manner that benefits shareholders.

Golden parachutes have become increasingly lucrative over the last few years despite coming under fire from shareholders who view them as a waste of corporate assets. Shareholders are often of the opinion that managers already have a fiduciary duty to act in the best interests of the company and the shareholders, and should not require additional incentives. Interestingly enough, in some cases, golden parachutes are viewed as departure gifts for executives, encouraging them to work for the takeover at the expense of shareholders.

As change-of-control agreements have become more common in the last two decades, efforts have been made to place restrictions on their use, with most of these efforts based on growing evidence that such agreements adversely affect stock returns. If your company does offer the option, however, it’s essential that you consult with and rely on a trusted employment lawyer experienced in evaluating and negotiating such agreements to ensure that you receive the golden parachute package you want and deserve.

The Employment Law Firm of Sawers McFarlane: Protecting Your Future

With over 35 years of combined experience, the lawyers at Sawers McFarlane are committed to helping every client with their unique employment challenges. They can provide advice about any labour or employment problem, and can represent employees in negotiations, hearings, and litigation if necessary. No matter how complex the case, Sawers McFarlane is there to make sure that your rights are protected and your best interests are served. They have served thousands of clients in the Calgary area and across Western Canada, and have earned a reputation as professional, tenacious, and efficient legal advocates. Sawers McFarlane is located at #920 250 5th St. SW, Calgary, Alberta T2P 0R4 or they may be reached by calling (866) 790-3221.