Page 678 - Bruce Ellig - The Complete Guide to Executive Compensation (2007)

Glossary 663

BIMBO Buy-in management buy-out.
bi-model A frequency distribution that has two modes (instead of one).
binding resolution A shareholder resolution that requires (not simply recommends) the company to
take action on the resolution.
binomial option pricing model A formula similar to Black-Scholes for determining the theoretical
value of a stock option. It includes the market price of the stock on the date of grant, the exercise price
of the option, the expiration date of the option, the dividend yield of the stock, the volatility of the
stock, and the risk-free interest rate. Used by some in applying FAS 123.
black knight An unfriendly offer to buyout a company. See white knight.
Black Monday Crash of stock market on Monday, October 19, 1987.
blackout period Time during which SEC-identified insiders are prohibited from trading the
company stock.
Black-Scholes model A formula similar to the binomial option pricing model for determining
the theoretical value of a stock option. It includes option price, price of an underlying security,
stock-price volatility, risk-free rate of return, dividend yield, and expected term of the option. Used by
many in applying FAS 123.
Black Tuesday Crash of stock market on Tuesday, October 29, 1929.
blind pool Investment decisions without knowledge of investor.
blockage Preventing access. Also, hiring an executive search firm to prevent that firm from hiring
away the company’s executives.
BLS See Bureau of Labor Statistics.
blue chip A company whose stock can be easily bought or sold without influencing price and there-
fore is considered a good investment.
Blue Cross Insurance coverage of hospital charges.
Blue Shield Insurance coverage of physician charges.
blue sky laws State laws designed to prevent investors from being defrauded.
board book Board of director material, typically for review at an upcoming meeting.
board of directors A legal body voted into being by the company shareholders to represent their
interests.
boilerplate Contract language that requires little, if any, change to be used by many individuals or
organizations.
boiler room operator Telephone operator of worthless securities.
bond A long-term debt obligation of the company, issued for business investments requiring
the payment of a stated amount of interest annually and the full amount borrowed at the end of a
stated period of time (see debenture). A high-yield or junk bond is a company debenture with low or
below-investment-grade rating, assigned by a rating service and resulting in the payment of a signifi-
cantly higher interest rate because of the high risk of forfeiture.
bonus A payment in either cash or stock for meeting or exceeding performance expectations. Some
consider a bonus as an after-the-fact subjective payment; others consider it synonymous with an incen-
tive payment. See incentive.
bonus (attendance) Pay for presence rather than performance.
bonus eligible Those meeting bonus participation requirements.
bonus (front-end) A payment at beginning of employment to represent forfeited benefits and
deferred pay with the former employer.