Executive Compensation Puzzle 1 Crossword

The amount of time or the level of performance required before an individual has an unconditional right to exercise a stock option or SAR or sell restricted stock. Vesting can be "time based", such as three years, or "performance based" in which some other objective must be met before the benefit is vested. Time vesting can be "graded" such as having 25 percent of granted stock options vest per year for 4 years or 'cliff' vesting when 100% is vested after a period of time.    
A required table in the company’s annual proxy statement setting forth pay for the CEO, principal financial officer and the top three other most highly paid executives of publicly traded companies.
A type of equity-related compensation in which the recipient receives pay that represents the increase in the company’s stock price over a specified period of time. Like stock options, SARs have a strike price, a vesting period and carry a certain term. For example if a 500 unit SAR is granted when the current stock price is $30, and if after a 3 years vesting period, the price has risen to $50, the SAR would pay the $20 increase times the number of units or a total of $10,000. The payment could be either in cash or stock.
An SEC and stock exchange required discussion of issues to come before a shareholder meeting and providing the opportunity for shareholders to vote on these issues. Proxy statements are required to present an extensive discussion of executive compensation and provide a vote on equity pay plans or changes thereto, along with election of Directors, selection of Independent Auditors and issues proposed either by the company or shareholders.
Pay for executives or other senior staff for achievement of specified company objections or for increase in shareholder value.
Payment to senior executives awarded due to a merger or sale, usually when the executive’s position is lost due to the change.
The date when an equity award, such as stock options, is made to an executive.
The price at which an option allows the holder to purchase a share of stock. The strike price is normally the market price on the date that the option is granted. Premium priced options set a strike price above the market price on the grant date.
A term used to define the expectation that executive pay in the form of annual bonus and long term incentives should correspond to company performance in the market place as measured by returns to shareholders relative to its peers.
Grants of stock that have restrictions such as vesting periods or other performance requirements before they are owned by the recipient.  
An individual who has access to information about a company which is not generally available to the public. Senior executives are always considered to be insiders.
Stock options which have a strike or exercise price above the market price on the date of the grant. Premium priced options are used to encourage superior performance by requiring greater stock price increases to make the option of value.
A stock option gives the holder the right to purchase a fixed number of shares of company stock at a set price for a set period of time, usually 10 years. The price at which the options may be "exercised" is usually the price of the company’s stock on the date the options are granted. If the company performs well, the stock price will increase over the exercise price, giving the options value and rewarding the executive for his role in the company’s success. Typically, such options may not be exercised for a period of time, usually between one and five years, before they "vest," or can be exercised.
Payments (cash, acceleration of unvested equity and other benefits) to employees when dismissed without cause or due to a substantial reduction in duties ("for good reason"). Severance is normally seen as compensation to bridge the time until a new job can be found.
Pay which takes the form of company stock or that varies with the stock price. Equity pay is frequently used as a long term award for executives since it aligns executive reward with an increase in shareholder value. Equity pay is also used in many startup operations which lack cash to attract executive or technical talent.
The process whereby a Compensation Committee seeks to target the amount to be earned by an executive. A typical target would be for base salary to match a peer group, annual incentive target at 100% of base salary, and long term incentive value of 400% of base salary.
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank) mandates that public companies must include in their proxy materials a separate non-binding shareholder vote to approve the compensation of the named executive officers. The vote must be held not less frequently than once every three years.