Page 742 - Bruce Ellig - The Complete Guide to Executive Compensation (2007)

Glossary 727

transfer agent Organization responsible for maintaining a record of the name and address of every
shareholder and the number of shares owned.
transfer pricing The price that a company charges for an item it sells or transfers to another unit
within the company.
transition award See retention award and transaction award.
travel and entertainment expense Reimbursement of expenses incurred on behalf of the company
due to business responsibilities.
Treasury Debt instruments issued by the federal government. Maturity dates vary: Treasury bills,
1 year or less; Treasury notes, 1 to 10 years; and Treasury bonds, 10 years or more.
treasury shares See treasury stock.
treasury stock Company common stock purchased by the company in the marketplace, typically to
reduce dilution. Shares are typically used for compensation and benefit plans.
treasury stock method Assumes all in-the-money stock options and unvested stock awards are
converted to outstanding stock and the proceeds are used to buy back as many shares as possible.
trigger-funded rabbi trust See springing rabbi trust.
truncated stock option A stock option that vests when the stock price returns to the option price of
an underwater grant.
trust A legal entity that takes title to property and administers it for the benefit of stated persons.
trustee The person responsible for ensuring that the terms of the trust agreement are followed.
trust fund Assets under the control of a trustee responsible for its maintenance and distribution.
trust-owned life insurance A form of corporate-owned life insurance with benefits paid to the
company to offset a liability.
tuition reimbursement See educational assistance.
turnaround Repositioning the business to an earlier stage in the market lifecycle.
turnover ratio Cost of goods sold divided by average inventory.
umbrella liability insurance Coverage that begins where other policies end.
umbrella pension formula Benefits from all plans added to determine if they meet designated total
target payout.
unbundling Separating and charging separately for services rather than combining them into one
overall rate. Services provided by search firms and stockbrokers are examples.
uncovered option When the option writer does not have the stock to meet the obligation. Also
called a naked option.
underpaid desired achiever Unless there are other reasons to remain with the company, this person
is likely to seek employment elsewhere and pay for performance.
underpaid overachiever Unless the company corrects this inequity, the person is likely either to
reduce performance or seek employment elsewhere.
underpaid underachiever This inequity is likely to be quickly solved by the company terminating
the person.
underwater stock option An option whose exercise price is above fair market value.
underwriter An investment bank or other organization that helps a company issue debt or equity issues.
unemployment compensation A combination of state and federal benefits provided to those who
were terminated (but not for those who left voluntarily), administered by the state where employed.