Page 686 - Bruce Ellig - The Complete Guide to Executive Compensation (2007)

Glossary 671

compensation committee A group of individuals responsible for reviewing compensation proposals
and recommending action to the board of directors. Such a committee is required of publicly traded
companies to at least set the pay of those executives named in the proxy. Other committees may be
responsible for those not addressed by the board compensation committee.
compensation committee report An SEC-required report that is to be included in the proxy
statement indicating executive pay philosophy in general and how the CEO pay was determined in
particular.
compensation consultant An internal or external person who provides compensation advice.
compensation package A combination of various forms of compensation.
compensatory stock plan A plan issuing stock to employees that does not meet all the requirements
of a noncompensatory stock plan.
competency What a person can do and how it is likely to be done.
competitive data Data external to the company of a comparable nature.
compounding The net effect of applying the interest not only to the original investment but also to
the increase in the investment’s value as a result of previous interest rates.
compound interest Interest on principle plus the interest accrued on that principle.
comprehensive medical plan Consists of a portion paid by the employee, a portion paid by the plan,
a portion paid by both, and the remainder paid by the plan.
compression Inadequate pay differentials between those managing and those being managed.
concierge services Personal services provided by an individual or organization.
conditional gross-up The specified percentage by which parachute payments must exceed Section
280G of the Code before a tax grossup payment is made.
confidentiality agreement Prohibits disclosure of confidential company information to those
outside the company without explicit permission.
conflict of interest When personal interest and that of the organization are not similar; namely, one
would benefit while the other would suffer the loss.
Consolidated Omnibus Budget Reconciliation Act Federal law requiring continuation of health-
care benefits after termination of employment.
consolidation See merger.
consortium A temporary alliance of independent organizations that have joined together to achieve
a particular outcome.
constructive receipt The point in time when a recipient has access to income. At that point it is
considered taxable income regardless of when received.
constructive termination A violation of the contract terms by the employer, permitting the
employee to seek full payment of the contract.
consultant Individual or organization that provides advice for a fee.
Consumer Price Index (CPI) A measure of inflation based on changes in prices of a market basket
of goods and services. It is mistakenly viewed by some as a measure of cost of living, which can only be
measured by what individuals actually purchase.
con-tainer A combination contingency fee and retainer arrangement for providing service.
con-tainer search A combination contingency and retainer fee arrangement with an executive search
firm. Typically includes an initial payment followed by progress payments and an additional payment if
a candidate is hired.