Silver Parachute


DEFINITION of 'Silver Parachute'

A form of severance paid to the employees of a company that is taken over by another company. Silver parachutes include severance pay, stock options and bonuses. Silver parachutes are generally extended to a large number of employees and often appear as clauses in hiring contracts that call for lucrative severance packages if an employee leaves the company, or, in particular, after a merger, acquisition or other change in corporate control.

BREAKING DOWN 'Silver Parachute'

Silver parachutes are similar to golden parachutes, which are received by the top executives in the corporation. A silver parachute is typically smaller, but more employees are eligible to receive one. Golden and silver parachutes are named such because they are intended to provide a "soft landing" for employees who lose their jobs either through corporate restructuring, mergers or other reasons. In certain cases, a silver parachute clause specifies that the benefits go into effect only if the company is taken over by another company, resulting in the employee losing his or her job.

  1. Acquisition

    A corporate action in which a company buys most, if not all, ...
  2. Takeover

    A corporate action where an acquiring company makes a bid for ...
  3. Shark Repellent

    Slang term for any one of a number of measures taken by a company ...
  4. Golden Parachute

    Substantial benefits given to a top executive (or top executives) ...
  5. Severance Pay

    The compensation that an employer provides to an employee who ...
  6. Merger

    The combining of two or more companies, generally by offering ...
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