Page 695 - Bruce Ellig - The Complete Guide to Executive Compensation (2007)

680 The Complete Guide to Executive Compensation

employee stock ownership trust (ESOT) The legal entity that holds the employee stock owner-
ship plan assets.
employee stock purchase plan (ESPP) Plan permitting purchase of company stock, typically at a
discount. An IRC Section 423 plan requires broad-based participation and no more than a 15 percent
discount.
employer The individual or organization that hires and compensates employees for performing their
assigned tasks.
employment-at-will The principle that states an employer may terminate an employee at any time.
employment contract A legal document specifying what the executive is to receive, at what time, and
under what circumstances. It also details the obligations of the executive during and after employment.
endorsement method A form of split-dollar insurance in which the company is the owner of the
policy and the insured’s beneficiary receives the amount in excess of the company’s cost.
endowment policy If death does not occur within defined time period, the face of the policy is
either paid in lump sum or in annual annuities with the sum equal to policy value in years prescribed
(e.g., 20 years).
enrollment The process by which individuals become members of a plan.
entrepreneur A person who starts a business, typically risking own capital in the process.
environmental scan A review outside of the company for threats and opportunities that could affect
the company.
EPEA See economic profit equity adjusted.
EPR See economic profit refined.
EPS See earnings per share.
Equal Employment Opportunity Commission (EEOC) The federal commission responsible for
enforcing civil rights and sex pay legislation.
equity Ownership of stock in a company. See shareholder equity.
equity-based plans Use of company common stock.
equity premium The return in excess of a risk-free investment such as U.S. Treasury bonds.
equity theory The view that individuals will act in accord with what they believe those actions mean
in current pay.
ERISA See Employee Retirement Income Security Act of 1974.
ERISA excess plan A nonqualified deferred compensation plan restoring pension formula benefits
lost under Section 415 of the Internal Revenue Code (IRC).
ESOP See Employee Stock Ownership Plan.
ESOT See employee stock ownership trust.
ESPP See employee stock purchase plan.
estate Property owned by an individual.
estate planning Conservation of assets while living and distribution at time of death.
estate tax A tax on the property of the deceased.
ethical behavior Conduct consistent with “good” behavior.
euro The common currency used by members of the European Union.
EVA Trademarked by Stern, Stewart, it is an abbreviation of economic value added.
evergreen plans An arrangement that either has no expiration or has renewal requirements that
continue indefinitely unless action is taken to terminate the plan.