Page 674 - Bruce Ellig - The Complete Guide to Executive Compensation (2007)

Glossary 659

affiliate An organization partly owned or otherwise controlled by another organization.
affiliated director A director who does not meet the definition of an independent director.
affiliated person A person who could influence company policy. An affiliated director is a person who
either is a retired employee or someone doing business with the company.
AFR See applicable federal rate.
after-market Security trading immediately after issuance of a new security.
after-tax contribution Employee’s payment on already taxed income.
after-tax effectiveness Individual’s after-tax income divided by company’s after-tax cost. As the first
increases and/or the second decreases, the after-tax effectiveness increases.
age discrimination Terminating employees because of age, as well as reducing pay or promotional
opportunities while employed because of age—usually older, not younger, ages. Many such actions are
illegal.
age limit An age beyond which the person is no longer eligible. Must be careful of illegal age
discrimination.
agency theory Belief that an agent will act in the best interests of the principal rather than his or her
own interest.
agenda A list, typically in segmented order, of items to be discussed at a meeting.
agent Person authorized by another to act on behalf of the latter in transactions and other matters.
age payment life insurance Payment to a stated age (e.g., 65), after which the policy is paid up.
aggregate exercise price The total amount to purchase shares of stock under option (i.e., option
price times number of shares).
aggregate pay relationship Addition of pay for two or more positions for comparison, such as pay
for the five proxy-named executives to determine the pay for top management.
AICPA See American Institute for Certified Public Accountants.
AICPA Bulletin Interpretive statement issued by the AICPA. Prior to formation of the APB in 1959,
these bulletins provided a level playing field in financial accounting.
aircraft See company aircraft.
alliance Contractual agreement between two or more companies specifying respective responsibili-
ties over a period of time without forming a new company.
allocation Distribution of an aggregate amount into individual accounts.
alpha The variation with market rate of return. Positive alpha is the premium above market; negative
alpha is the reverse.
alpha coefficient A statistical measurement of security share volatility versus risk-free shares.
alternative dispute resolution Avoidance of litigation through arbitration.
alternative minimum tax (AMT) The minimum amount of tax that must be paid if the individual
has any tax preference income (TPI).
American Depository Receipt (ADR) A record that a particular U.S. investor owns a stated num-
ber of shares of a foreign company that has deposited said shares with a U.S. financial institution; such
shares may be traded on a stock exchange.
American Institute for Certified Public Accountants The trade association of the thousands of
accountants responsible for auditing financial statements.
American Stock Exchange A secondary market, much like but smaller than the New York Stock
Exchange, for buying and selling stock.