Question at position 9 A ________ is a compensation arrangement between a firm and its senior management team that promises these individuals substantial cash payment if their firm is acquired and they lose their jobs in the process.golden parachuteshark repellentwhite knight agreementgreenmail agreement单项选择题
A
golden parachute
B
shark repellent
C
white knight agreement
D
greenmail agreement

Question

Question at position 9 A ________ is a compensation arrangement between a firm and its senior management team that promises these individuals substantial cash payment if their firm is acquired and they lose their jobs in the process.golden parachuteshark repellentwhite knight agreementgreenmail agreement单项选择题

A

golden parachute

B

shark repellent

C

white knight agreement

D

greenmail agreement

BlackTom AI · Accepted Answer

A golden parachute is an executive severance package that guarantees substantial cash and other compensation to senior managers if they are displaced because the firm is acquired.

1. Relevant knowledge points and concepts
- Mergers and acquisitions (M&A) often trigger changes in management. 
- A golden parachute is a pre-negotiated compensation arrangement (severance pay, cash bonuses, accelerated stock option vesting) triggered by a change in control.
- Other related M&A terms: shark repellent (general anti-takeover defenses), white knight (friendly acquirer who rescues target from a hostile bidder), greenmail (target repays a hostile bidder to buy back its shares at a premium).

2. Step-by-step reasoning
- The question asks for a compensation arrangement promise to senior management of substantial cash payment if the firm is acquired and they lose their jobs. 
- Match this description to known M&A terminology:
  a) Golden parachute: specifically defined as large cash/severance payments to executives upon change of control or termination following an acquisition.
  b) Shark repellent: broad set of charter/bylaw provisions designed to discourage hostile takeovers (not a specific compensation promise).
  c) White knight agreement: involves another firm (friendly buyer) stepping in to acquire the company, not a compensation clause for managers.
  d) Greenmail agreement: target company pays a takeover bidder a premium to repurchase its shares to stop a takeover; again, not severance pay for executives.

3. Calculations
- None required for this definitional question.

4. Why the correct answer is correct
- The core phrase “promises these individuals substantial cash payment if their firm is acquired and they lose their jobs” exactly matches the standard definition of a golden parachute, which is designed to protect executives financially in the event of a change in control.

5. Why the other options are incorrect
- Shark repellent: anti-takeover mechanisms (provisions), not direct cash payments to executives.
- White knight agreement: refers to an alternate buyer, not executive compensation.
- Greenmail agreement: a payment from the target to a bidder to stop the takeover, not severance for managers.

Conclusion: The correct answer is golden parachute, which matches the provided answer.

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