Page 725 - Bruce Ellig - The Complete Guide to Executive Compensation (2007)

710 The Complete Guide to Executive Compensation

probability The likelihood of an event occurring.
probate The court of law review of the will to ensure validity.
product lifecycle See market lifecycle.
profit and loss statement See income statement.
profit center A part of the organization with responsibility for sales, costs, and profits.
profits What remains after expenses are deducted from revenues.
profit-sharing plan An arrangement whereby the company shares its profits with its employees.
Typically, this uses a predetermined defined formula.
pro forma earnings Called by some “earnings before any bad stuff”—initially used by start-ups
and dot-coms but misused by others. For many, this was EBITDA (earnings before interest, taxes,
depreciation, and amortization).
progressive tax A tax rate that increases as income increases. The opposite of regressive tax.
progressivity principle A geometric increase in incentive and/or bonus opportunities with an arith-
metic increase in salary and/or job grades.
prohibited transaction Financial transactions between the employer and ERISA-covered plan.
promotion An increase in responsibility, usually accompanied with a pay increase and a new job title.
promotional guidelines Suggested promotional increases typically based on position in new job grade.
promotional increase A salary increase following an increase in responsibilities.
promotion stress Unduly worrying about not getting promoted.
pro rata vesting See installment vesting.
prospectus See Form S1.
provision for taxes The estimated amount of taxes owed for the accounting period and reported on
the income statement.
proxy A person who votes on behalf on another.
proxy statement Description of items to be voted on at upcoming shareholder meeting that is mailed
to shareholders.
prudent man rule See prudent person rule.
prudent person rule Investment by a fiduciary or trustee only if a prudent intelligent person would
do the same.
PS 58 costs The extent that the cost of life insurance provided by employer exceeds that allowed by
the Uniform Premium Tax Table of Section 79 of the Internal Revenue Code and is taxable income.
PSP See performance-share plan.
psychic income See intrinsic compensation.
public company See publicly held companies.
Public Company Accounting Oversight Board Beginning in 2003, this board, created by
Congress, became responsible for overseeing and disciplining accountants.
publicly held companies Companies whose stock is traded on a stock exchange.
public offering Offer of sale of securities registered with the government to the public.
public sector Government and companies owned by government.
pulse award Slang term for a stock award that becomes fully vested at end of term if still alive—no
performance required.
PUP See performance-unit plan.