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Printable Guides: Prospect Research 101 (pdf) | Prospect Profile Template (doc) |
Publicly traded companies are required by law to disclose their financial information, as well as salary and other compensation (including company stock) earned by company executives and directors, otherwise known as insiders. This information can be found in the company's annual report (Form 10-K) or in more detail in the proxy statement (Form DEF 14A). It is not always clear, however, how much a certain individual is earning. It is crucial to read through the footnotes to obtain a clear understanding of executive compensation.
It is also important to factor in any stock options (a stock option gives the executive or insider the right, but not the obligation, to buy or sell an asset at a set price on or before a given date) when calculating an individual’s total compensation. Note whether the options held are exercisable (options which have vested but not yet been ‘cashed’) or unexercisable (options which are held by employer in employees investment account but which are not available to be ‘cashed’ by employee until a future date.)
A comprehensive glossary of financial terms can be found at: Forbes or Fidelity.