Page 737 - Bruce Ellig - The Complete Guide to Executive Compensation (2007)

722 The Complete Guide to Executive Compensation

stock appreciation right (SAR) The right to receive the increase in stock price over option price in
stock or cash without providing funds to pay the option price.
stock award Stock given at no cost (other than tax consequences) with or without restrictions as to
when it can be sold. The former is restricted stock.
stock bonus See stock award.
stockbroker A person who arranges for the sale and purchase of stock.
stock buyback Company buys back its shares of stock.
stock certificate A document attesting to the ownership of a stated number of shares of a particular
company’s stock.
stock depreciation right See stock indemnification right.
stock discounted stock options See discounted stock option.
stock dividend A dividend paid in equity rather than cash.
stock exchange A marketplace for the buying and selling of securities other than those issued by a
government. The largest is the New York Stock Exchange. Only members of the exchange may trade
securities.
stock-for-stock exchange See stock-for-stock exercise.
stock-for-stock exercise A cashless exercise of a stock option using the value of shares already
owned. Also called a stock swap.
stock-for-tax withholding A cashless method of meeting tax withholding requirements upon
exercising a stock option by using the value of shares already known.
stock grant The issuance of company stock either through option or awards.
stock grant plan A plan that permits stock grants. Typically, it is approved by shareholders and
includes authorization for use of a stated number of shares of stock.
stockholder See shareholder.
stock indemnification right Protection against stock price decline for a stated period of time after
exercising an option that is paid in cash.
stock market Place where shares of company stock are traded. It is also called a secondary market
because shares are bought and sold between investors using stockbrokers rather than directly by
the company. Stocks sold to an investor, such as through an initial public offering (IPO), would be the
primary market.
stock option The right of a person to buy a stated number of shares of common stock of a company
at a prescribed price over a specified period of time.
stock option multiple method See exercise cost method.
stock ownership guidelines The minimum number of shares to be owned by an executive or
director, stated either in absolute number of shares or as a multiple of pay.
stock price The value of a share of stock, typically set by the marketplace (i.e., stock market).
stock purchase plan A program enabling individuals (typically employees) to purchase stock under
either a statutory or nonstatutory plan.
stock repurchase See stock buyback.
stock split The change in number of shares by a stated ratio (e.g., two for one), with the stock price
appropriately adjusted. A reverse split is when the number of shares is decreased (one for two).
stock swap See stock-for-stock exercise.
stock tender See stock-for-stock exercise.
stock unit A right to convert to a common share of stock under specified circumstances.