Page 691 - Bruce Ellig - The Complete Guide to Executive Compensation (2007)

676 The Complete Guide to Executive Compensation

diluted earnings per share Either the percentage or absolute decrease in stock value resulting from
the issue of additional shares of stock. Using the treasury measure, all nonconverted stock options and
restricted stock awards are added to common shares of stocks outstanding. This product is divided into
net income.
dilution Either the percentage or absolute increase in share’s decrease in stock value resulting from
the issue of additional share of stock.
dining club membership Membership in the name of the individual or company (permitting
executive use) for meals, typically lunch and perhaps dinner.
direct compensation Pay received in cash or its equivalent.
direct costs See cost of goods sold.
direct method A method of constructing the cash flow statement that records only the inflow and
outflow of cash.
director Individual elected by the shareholders to serve on the board of directors with responsibility
to hire and fire the president and monitor the company business. May also be part of an internal job title.
director and officer (D&O) liability insurance Coverage provided to protect corporate officers and
members of the board of directors from lawsuits resulting from discharge of their responsibilities.
disability Physical and/or mental reduction in abilities.
disability pay Pay for either a brief or prolonged period of absence of work because of reduction in
physical and/or mental abilities.
disappearing stock option exercise See recessions.
disclaimer Denial of responsibility for accuracy of statements.
disclosure The revealing of data and/or information.
discount broker See broker (discount).
discounted cash flow Future cash flow discounted to its present value.
discounted stock option A stock option with a price below fair market value at time of the grant.
The discounted price may either be determined at time of grant or during the term of the grant in
accordance with a prescribed formula. See discounted stock purchase.
discounted stock purchase Similar to a discounted stock option plan, except that the decision period
is measured in days rather than years. See stock discounted stock options and stock purchase plans.
discount stock price Shareholders of a takeover-targeted company are able to buy their company
shares at a deep discount, making it more expensive to the bidder because of the increased number of
shares.
discretionary bonus A payment not based on specified performance criteria.
discretionary payment See discretionary bonus.
dismissal pay See severance pay.
disposable income What is left after payroll deductions for taxes and other items.
disqualification Loss of tax-favorable status.
disqualifying disposition The sale of stock acquired under a statutory option before meeting the
holding periods prescribed by law.
distributed pay adjustment dates Pay actions occur in relation to a date unique to the individual
(e.g., date of employment). See common adjustment date for the alternative approach.
distribution Defined in terms of a range or in relation to a measurement of central tendency.
diversification The allocation of investment among two or more choices. The greater the number of
selections, the greater the degree of diversification. It is an offset of the possible gain for few choices