Etsy’s Board of Directors amended its executive severance plan, which outline what a top executive receives when terminated, aka “golden parachutes” or “golden handshakes.” The new terms of the plan take effect on January 1, 2019.
According to the filing with the SEC on Monday, the Board’s Compensation Committee approved the amended plan on December 14th, “primarily to provide pro rata cash bonus payments to all participants, other than Etsy’s Chief Executive Officer.”
The committee, which decides which executives can participate in the severance plan, also extended the period during which participants receive continued salary payments and healthcare continuation coverage upon a “qualifying termination other than in connection with a change in control.”
Unlike regular employees, senior executives generally qualify for continued salary and healthcare benefits for an extended period of time after leaving a company. In Etsy’s case, that is 12 months for participants.
The new plan noted that the current salary and healthcare continuation periods will remain unchanged for Etsy’s CEO and Chief Financial Officer.
In September, Etsy announced that Chief Operating Officer Linda Kozlowski would depart by the end of this year. Included as part of her severance agreement: she’ll continue to earn a salary for six months after her departure (her base salary is $350,000) and will be reimbursed for COBRA health insurance premiums for six months. She’ll also receive $262,500 within 60 days of her departure.
We had taken a look at Etsy’s golden parachute provisions in 2015, which you can read here.
Corporate boards generally justify such compensation plans by claiming it helps them attract and retain top talent.