Page 720 - Bruce Ellig - The Complete Guide to Executive Compensation (2007)

Glossary 705

out-of-the-money option See underwater stock option.
outplacement assistance Help provided to a person who lost employment to find a new job,
beginning with the preparation of a resume.
outside director See nonmanagement director.
overhang The sum of all in-the-money stock options, unvested stock awards, and number of shares
available for use. It can also be expressed as a percentage with the sum divided by the total number of
common shares outstanding.
overpaid overachiever A hardworking person who is paid more than the job is worth, possibly the
result of being demoted without a decrease in pay.
overpaid underachiever A person whose performance has slipped but not the pay received, possibly
the result of a contract guaranteeing a stated amount of pay regardless of performance.
over-the-counter shares Company securities not publicly traded on one of the major stock
exchanges.
owner equity See shareholder equity.
ownership guidelines Guidelines or, in some cases, requirements as to the number of shares or
aggregate value of such shares that are to be retained by executives. The greatest requirement applies
to the CEO and then is proportionately reduced for lower levels.

paid-in capital Cash received from investors for sale of company stock, thereby consisting of par
value of stock plus the amount received in excess of par value.
paid time off Absence from work with pay.
paired comparison The measurement of an item against every other item to determine relative
ranking order. This could apply to jobs or individual performance.
parachute A severance package for an individual displaced as a result of merger or acquisition.
Depending on coverage, parachutes range from platinum to gold to silver to tin.
parallel grants Grants of options and/or awards that are independent of each other and self-
standing. See tandem grant.
parental leave Time off to care for child or parent.
Pareto’s law Eighty percent of the desired outcome can be achieved with 20 percent of the available
effort.
PARSAP See performance-accelerated restricted stock award plan and time-accelerated restricted
stock award.
PASS award Performance accelerated survival stock.
partnership An unincorporated business of two or more persons who are taxed individually on
income received.
par value For stocks, it is the value assigned to stock at time of IPO (subsequently adjusted for stock
splits). For bonds, it is the amount that will be paid at time of maturity.
patent An invention or process that the government grants an exclusive right to use for a stated
period of time.
payback The period of time before an investment is paid by savings.
pay compression A reduction in the pay differences between jobs of different values.
pay differentials Factors that are used to distinguish differences in pay (e.g., geographic differences).
pay for performance The philosophy that states pay will increase and decrease in relation to
performance (individual, group, and/or company).
pay gap The pay spread between the CEO and lower worker pay (however measured).