Under the rules, if the present value of a CIC payment to an executive exceeds his/her “safe harbor” (three times the executive’s average taxable compensation over the five most recent calendar years preceding the CIC or their “base amount”), the company loses tax deductions for the amounts considered “excess parachute payments.” That’s where “the golden parachute,” golden parachute consultants and 280G come into action; the 280G is basically a way to keep golden parachutes under control (think “golden handcuffs”). A golden parachute consultant is a financial planner who makes sure the golden parachute rules are followed when an executive is terminated from his/her position.

The term “golden parachute” was first coined because of Howard Hughes, so, to keep CEOs from receiving outrageous payouts and for all to remain legal and solid with the IRS, a golden parachute consultant is very important.