Page 694 - Bruce Ellig - The Complete Guide to Executive Compensation (2007)

Glossary 679

economic profit equity adjusted (EPEA) Net operating profit after tax (see NOPAT) minus after-
tax cost of debt plus a reasonable return on equity. It is also called economic profit modified. If this is
positive, shareholder value is appreciating beyond an expected return on investment. If it is negative,
one must look to economic profit refined (EPR) to see if any value is appreciating.
economic profit refined NOPAT (see definition) minus the after-tax interest on debt plus a compa-
rable value for net assets and an appropriate return on equity. By including net current assets, one has
also charged it with their use.
economic value added A form of economic profit.
economic value lost A reduction in economic profit over previous period.
EDGAR (Electronic Data Gathering, Analysis, and Retrieval) An SEC online database that
provides easy access to company documents filed with the SEC (e.g., 10K).
educational assistance Payment by an organization for a portion of tuition and books in approved
coursework.
educational trust A trust set up for college expenses.
EEOC See Equal Employment Opportunity Commission.
effective date The date when a plan goes into effect.
effective tax rate The percentage resulting when total tax paid is divided by gross income.
egalitarian pay system All employees are covered by the same programs, differentiated only by pay
and pay-level-related coverage.
8K See Form 8K.
eighty-twenty rule See Pareto’s law.
EITF See Emerging Issues Task Force.
elder care Support for parents/relatives who need assistance.
electronic funds transfer The electronic transfer of funds from one account to another.
eligibility The criteria for participation in a particular plan.
eligibility date The date a person becomes eligible to participate. See vesting.
eligibility period Period of time when a person can enroll in a plan.
Emerging Issues Task Force (EITF) The unit of the Financial Accounting Standards Board that
attempts to identify issues that accountants are or will be facing.
employee Individual compensated for work performed at direction of employer.
employee assistance program (EAP) Assistance provided in identifying and counseling employees
in such areas as substance abuse, dependent abuse, financial concerns, stress, and legal problems.
employee benefits These include time off with pay, service programs, health care, survivor protec-
tion, and retirement coverage for all or virtually all employees in the organization.
employee contribution Payments made by employee to a benefit plan.
employee grantor secular trust Assets reserved for paying individual are paid by employer to a
trust.
Employee Retirement Income Security Act of 1974 (ERISA) Covers employment eligibility and
vesting, financial responsibility, fiduciary standards, form of payment, funding, and reporting as well as
extensive disclosure of employer pension and welfare plans.
employee stock option See option.
employee stock ownership plan (ESOP) Company stock that is put in a trust for employees and
given to them when they leave the company. It is considered a form of retirement plan.