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Friday, May 20, 2011

On Golden Parachutes

What a Golden Parachute IS: a lucrative payout from a company to a top executive at some time such as a turn-over in ownership, a re-organization and/or when the employee leaves for unspecified reasons. It usually includes stock options, a cash bonus, severance pay and/or other perks. Golden Parachutes are found on Wall Street and in the private sector.

What a Golden Parachute IS NOT: contracted retirement packages determined years prior to one's resignation and/or retirement. They are not one's own 401K or pension to which contributions have been made by the employee. It is also not contributions often made by the employer according to financial contracts (that can be legal and binding and thus sometimes not able to be rescinded simply by whim).

Just thought that might need to be clarified.

Why, you ask?

In the City of Troy, some employees who have been here since prior to 1997 were part of an employee group who had a different type of retirement benefit than those hired after 1997. The benefits cost the city more, and so in 1997, they stopped doing it that way. Those who were already IN stayed in, they should have. Those who came after were put into a more cost-effective type program.

When these veteran employees leave, they are entitled to their "retirement" packages. They EARNED them. They CONTRIBUTED to them. They are not being given GIFTS OR BONUSES when they leave their jobs; they are retiring, resigning or being laid off.

Sometimes, companies/corporations/cities offer "early retirement incentives." That can be a payout of future earnings towards those retirement programs, and it is often done to SAVE money in the long run. It also allows a city to off-load the costlier employees, thus saving in both wage and retirement contributions. This is done all over the public and private sector, and is recognized widely as an cost efficiency measure as it allows new employees to be hired in at lower wages and less expensive retirement programs.

The City of Troy has done this. They will see a turn-over of valuable, experienced-- albeit costly -- employees. It's an unfortunate side-effect of making the tough decisions to save money in the long run

However, Troy has never offered a Golden Parachute to any employee.

There are no Golden Parachutes in Troy.

Anyone referring to the retirement benefits and early retirement incentives as such is often a) misinformed or b) jealous or c) both.

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