Many executives are also covered by severance and change-in-control agreements.
Severance agreements provide for payments to executives in the case of voluntary
or involuntary termination. They are often included in agreements for executives
hired from outside the company to encourage him or her to leave a prior employer
in case the new arrangement sours.
Change-in-Control agreements, also known as "golden parachutes," compensate executives
for loss of job due to mergers or sale. They are structured to encourage CEOs to
seek out sale or merger opportunities that add to shareholder value.