DEFINITION of 'Golden Life Jacket'

An exceptional compensation package offered by the acquiring company to the top executives of the company being bought. The offer is meant to keep those executives interested in retaining their positions.

BREAKING DOWN 'Golden Life Jacket'

A form of sweetheart deal, golden life jacket benefits include in-the-money options and additional large bonuses. The options offered may not be in the best interests of shareholders, as the executive holding the options could be unaffected by large swings in share prices.

Furthermore, there is less incentive to make the best possible decisions, which could impact its share price, because the executives often receive the benefits regardless of how well the company performs.

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