DEFINITION of 'ABC Agreement'

An agreement made between a purchasing member with a seat on the NYSE and the firm in which he or she works. With the approval of the NYSE, this agreement stipulates that the employee of the firm may:

a) transfer the seat to another employee of the firm
b) retain ownership and purchase a new seat for another individual designated by the firm
c) sell the seat and transfer any gains to the firm.

BREAKING DOWN 'ABC Agreement'

ABC agreements are important because the firm pays for the seat on the NYSE that the employee is using. As such, the firm wishes to insure itself against the possibility of the employee - should he or she no longer work for the firm - negatively impacting the firm's ability to trade on the NYSE.

The ABC agreement is so named because of the three main provisions it allows. Similar types of arrangements exist between firms and their employees on various other exchanges.

RELATED TERMS
  1. Available Seat Miles (ASM)

    Available seat miles is the measure of an airplane's carrying ...
  2. Key Employee

    A staffer who is a stakeholder and in a decision-making role ...
  3. Firm

    A firm is a business organization, such as a corporation, limited ...
  4. New York Stock Exchange - NYSE

    The New York Stock Exchange, located in New York City, is considered ...
  5. Exempt Employee

    The term “Exempt Employee” refers to a category of employees ...
  6. Option Agreement

    An option agreement is a legal contract between two parties outlining ...
Related Articles
  1. Financial Advisor

    Life Insurance Plans to Help Your Small Business Retain Employees

    How to use and design cash value life insurance plans as an incentive to help attract and retain key employees.
  2. Personal Finance

    Why You Might Want a Seat That’s Worse Than Economy

    Surprise: The new basic economy airline ticket, dubbed “last class” by critics, might actually be worth the price. Here’s why.
  3. Financial Advisor

    Beware Of Company Stock In Qualified Plans

    While this strategy does have a few advantages, it can also pose some substantial risks to employees.
  4. Financial Advisor

    FAs Should Factor Clients Into Succession Plans

    Financial advisory firms are finally taking succession planning seriously. Here's how.
  5. Managing Wealth

    8 Ways To Fly First Class For Cheap

    Slide into one of those first class (or business class) seats for cheap.
  6. Personal Finance

    What's Your Employee Value?

    Have you ever wondered how much you're worth to your boss? Here's a method for calculating that value.
  7. Financial Advisor

    Why Do Businesses Benefit From Life Insurance on Employees?

    Companies can buy life insurance on their employees and collect the benefit proceeds. Find out why companies want to benefit from the death of their employees.
  8. Retirement

    A Guide to Employee Stock Option Plans

    Stock option plans are among the ways employers can compensate employees. Here's how they work.
  9. Personal Finance

    8 Reasons Why Valued Employees Quit

    Salaries are important, but retaining top employees requires more than just competitive pay.
RELATED FAQS
  1. What does a New York Stock Exchange membership entail, and why is it known as 'owning ...

    Owning a seat on the NYSE enables a person to trade on the floor of the exchange, either as an agent for someone else or ... Read Answer >>
  2. What does a merger or acquisition mean for the target company's employees?

    Learn about the likely impact of a merger-and-acquisition deal on the target company's employees, including their benefits ... Read Answer >>
Hot Definitions
  1. Financial Risk

    Financial risk is the possibility that shareholders will lose money when investing in a company if its cash flow fails to ...
  2. Enterprise Value (EV)

    Enterprise Value (EV) is a measure of a company's total value, often used as a more comprehensive alternative to equity market ...
  3. Relative Strength Index - RSI

    Relative Strength Indicator (RSI) is a technical momentum indicator that compares the magnitude of recent gains to recent ...
  4. Dividend

    A dividend is a distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.
  5. Inventory Turnover

    Inventory turnover is a ratio showing how many times a company has sold and replaces inventory over a period.
  6. Watchlist

    A watchlist is list of securities being monitored for potential trading or investing opportunities.
Trading Center