History of parachute

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.



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.





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/