Final answer:
A golden parachute refers to the pre-negotiated compensation package given to executives if they are forced out of a company due to a hostile takeover, designed to offer financial security for the ousted executive and potentially deter the takeover itself.
Step-by-step explanation:
A golden parachute is a term used in the business world, particularly in the context of hostile takeovers, to describe a sizable financial compensation package that is guaranteed to a senior executive in the event that they are ousted from the company as a result of the takeover. These packages often include severance pay, stock options, bonuses, and other benefits that aim to provide security for the executive post-termination. The rationale behind a golden parachute is to deter a hostile takeover by making it more costly and complicated, or to ensure that executives act in the best interest of shareholders without fear of personal financial loss should the company be taken over.