Page 677 - Bruce Ellig - The Complete Guide to Executive Compensation (2007)

662 The Complete Guide to Executive Compensation

bad-boy clause Employment contract clauses that withhold nonqualified pensions, stock option
exercises, and other payments if the executive performs in a manner detrimental to the company after
leaving employment.
bail-out When a company in poor financial position agrees to be purchased by another in better
financial position.
bakeoff Selection process of picking an investment banker.
balanced scorecard A performance management process defined by Robert Kaplan and David Norton
that focuses on four strategic objectives: customer, financial, business processes, and innovation/learning.
balance sheet The financial statement at a specific date for an organization that lists its assets and
debits, typically on the left side of the page, and its liabilities or credits along with shareholder
equity on the right side of the page. The assets must equal or be in balance with the liabilities plus
shareholder equity.
bank draft Check drawn on bank’s funds in another bank.
bankruptcy The inability to meet one’s financial obligations. See Chapters 7, 11, and 13 bankruptcy.
base pay See salary.
basis point 1/100th of 1 percent.
bear Person who sells securities anticipating a decline in prices. See covered bear and naked bear.
bearer bond A bond that is payable to the holder, unlike a registered bond.
bear hug The inducement by a potential acquiring company to get the target company’s board of
directors to recommend the sale to shareholders by publicly announcing its purchase intention.
bear market A stock market with falling stock prices.
bear raid Investors acting in collusion to drive down the price of a security by selling it.
bear squeeze The purchase of securities to raise prices and reduce liquidity.
bed and breakfast deal The sale of stock followed by its repurchase the following day. Usually, done
to establish profit or loss for tax purposes.
behavior How a person conducts himself or herself as opposed to what the person does.
bell-shaped curve The normal distribution of events in which the mean, median, and mode are
identical.
below-market pricing Setting the price of an item (such as a share of stock) lower than its fair value
on that date.
benchmark The reference point or standard by which one can compare performance. Examples
include a stock index (e.g., Standard & Poor’s 500) and an aggregate of selected peer companies for
financial or other performance.
beneficial ownership Typically defined as shares owned plus vested stock options (and options and
awards to become vested in 60 days).
beneficiary The person receiving the death benefit from the insurance company following the
insured’s death.
benefit plan summary See summary plan description.
benefits See employee benefits.
beta A measure of stock volatility or riskiness (versus the market) used to calculate the company’s cost
of capital. One of the factors in the Black-Scholes formula. See volatility.
beta coefficient A statistical measurement of security share volatility versus the whole market.
bid price The quoted highest price for a security.
Big Board See New York Stock Exchange.