Compensation Glossary

Par Value

Par value for stock is the price at which a company's shares were initially offered up for sale. The intent of par value is that prospective investors be assured that an issuing company would not issue shares at a price below that par value. That said, par value is usually set at a minimal (pennies) amount, because some state laws still require that a company cannot sell shares below the par value; by setting the par value extremely low, a company can avoid any trouble with future stock sales if its shares begin to sell in the penny stock range.