Page 76 - Bruce Ellig - The Complete Guide to Executive Compensation (2007)

62 The Complete Guide to Executive Compensation

• Shares exercised This is the total number of granted shares that have been exer-
cised and are now in the optionee’s hands (or the marketplace if they were sold). In
Table 2-9, this is shown as 750,000.

• Shares forfeited These are shares that were either under option or restrictions
and have been forfeited because the option period lapsed or the individual left before
exercising the option or receiving the award. In Table 2-9, this is 100,000 shares.
• Shares granted This is the total number of shares granted under the stock plan. In
Table 2-9, this is 1,000,000.
• Shares not exercised These are shares either under option or awards under restric-
tions that have not been earned. In Table 2-9, the total is 150,000 shares. This total
consists of vested and nonvested shares. Vested shares (50,000 in Table 2-9) have
met the time restriction and are exercisable at any time. Nonvested shares (100,000 in
Table 2-9) cannot be exercised by the optionee because the earn-out time requirements
have not been met.

• Shares not exercised and available for use These are shares available for use
(600,000 shares in Table 2-9) plus shares not exercised (150,000 shares), or a total
of 750,000 shares. This total is often called the overhang. Typically, it is expressed
as a percentage of shares outstanding (15,250,000 in Table 2-1), or 4.9 percent in
Table 2-9.
• Shares outstanding This is the total number of shares outstanding in the market-
place (15,250,000 in Table 2-1).

• Shares to sales ratio This is the result of dividing net sales ($101,546,400) by the
number of diluted shares outstanding (16,250,000), or 6.2 (to 1). Low ratios (com-
pared with comparable companies) might suggest overuse of common stock and/or
underperformance.
• Short-term assets See Current assets.
• Short-term debt See Current liabilities.

• Short-term liabilities See Current liabilities.
• Total capital This is long-term debt (the sum of monies owed by the company that
extend beyond a year) and shareholder equity, or $126,763,900 (Table 2-7) and
$137,077,400 (Table 2-8), respectively. In the example, this is $263,841,300 (see
Capital employed). Some choose to use total noncurrent liabilities ($170,237,400 in the
example) instead of long-term debt to see how management has used these available
dollars.

• Total-debt-to-total-assets ratio This is total liabilities divided by total assets. In
the example, this is $193,920,500 (Table 2-7) divided by $330,997,900 (Table 2-6),
indicating a ratio of 0.586 to 1 for total debt to total assets.
• Total shareholder return (TSR) See Shareholder value increase.
• Treasury stock These are shares of the company’s common stock that it has pur-
chased in the marketplace for later use, typically, employee compensation and benefit