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  • Running Head: GOLDEN PARACHUTE

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    Alkadir del Aziz
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    1. The document discusses John Welch's golden parachute from General Electric in 2001 of $417 million, which was the largest in US history at the time. 2. It provides details on Welch's career at GE for 20 years and his activities after leaving, as well as criticism that GE lost momentum after Welch and struggled in the 2008 financial crisis without his leadership and business model. 3. The document argues that while golden parachutes are common in mergers and acquisitions, Welch's payment was too large and not ethical, and that money would have been better spent motivating remaining employees rather than favoring departing executives.

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    1. The document discusses John Welch's golden parachute from General Electric in 2001 of $417 million, which was the largest in US history at the time. 2. It provides details on Welch's career at GE for 20 years and his activities after leaving, as well as criticism that GE lost momentum after Welch and struggled in the 2008 financial crisis without his leadership and business model. 3. The document argues that while golden parachutes are common in mergers and acquisitions, Welch's payment was too large and not ethical, and that money would have been better spent motivating remaining employees rather than favoring departing executives.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    Download as docx, pdf, or txt
    20 views4 pages

    Running Head: GOLDEN PARACHUTE

    Uploaded by

    Alkadir del Aziz
    1. The document discusses John Welch's golden parachute from General Electric in 2001 of $417 million, which was the largest in US history at the time. 2. It provides details on Welch's career at GE for 20 years and his activities after leaving, as well as criticism that GE lost momentum after Welch and struggled in the 2008 financial crisis without his leadership and business model. 3. The document argues that while golden parachutes are common in mergers and acquisitions, Welch's payment was too large and not ethical, and that money would have been better spent motivating remaining employees rather than favoring departing executives.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    of 4

    Running head: GOLDEN PARACHUTE 1

    Golden Parachute

    Name

    Institution
    Golden Parachute 2

    Golden Parachute

    Multiple choice questions

    1a)

    The CEO considered in this scenario is John Welch who received the largest golden parachute in

    US history.

    1b)

    John Welch received the golden parachute from General Electrical in 2001 after serving as the

    CEO for the company for 20 years.

    1c)

    The Golden parachute was paid at a gross value of $417,361,902 (Hodgson, & Ruel, 2012).

    1d)

    After the departure of john welch in 2001, General electrical revenues continued on the growth

    trajectory with the new CEO diversifying into the global markets. However, after the financial

    crisis of 2008, the revenues declined so and the company had to change the business model

    developed by john welch to steer the company out of the crisis. The revenue growth has not been

    growing on the same path as when John Welch was the CEO with many critics terming the

    succession plan from John Welch was not well planned and the company lost some of the top

    executives (Kraemer, 2017).

    1e)

    After leaving the firm in 2001, John Welch joined Clayton a private equity firm as an

    advisor and IAC as an adviser to the CEO. He later founded the John Welch management

    Institute an online executive management program and is the executive chairman.


    Golden Parachute 3

    In business, golden parachutes are used mostly in mergers and acquisitions as a defense

    against acquisition or as a bargaining tool for a good deal (Sanghoee, 2014). The john welch

    payment was not ethical even though he had been a long-serving employee of the company.

    Considering it remains the highest ever paid golden parachute even after 18 years, means that it

    was overpaid. The deal led to two top executives leaving the firm for other companies which

    were a massive loss for the company. Paying highly for a leaving executive is not good but rather

    the money should be channeled towards motivating the remaining employees. Smart policies

    should consider the remaining employees who are working for the benefit of the company but

    not favoring the leaving ones.


    Golden Parachute 4

    References

    Hodgson, P., & Ruel, G. (2012). Twenty-one US CEOs with golden parachutes of more than

    $100 million. GMI Ratings.

    Kraemer, H. (2017). Why Jeff Immelt's GE Succession Will Go Much Better Than Jack

    Welch's. Fortune. Retrieved 9 November 2017, from http://fortune.com/2017/06/14/ge-

    jeff-immelt-jack-welch/

    Sanghoee, S. (2014). Golden Parachutes: Why it's bad business. Fortune. Retrieved 9 November

    2017, from http://fortune.com/2014/04/11/golden-parachutes-why-its-bad-business/

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