Although widely criticized as a "reward for failure", golden parachutes are potentially useful. They get competent employees to accept the CEO job, they facilitate an efficient market in corporate control, and they prompt inadequate CEOs to leave on their own volition.
As Merrill Lynch and Citigroup bosses leave their struggling banks with millions of dollars in their pockets, golden parachutes are once again broadly condemned. The outrage is justified on a meritocratic basis: why should these CEOs earn so much money if they fail?