It stands for premium income equity security; a mandatory convertible that represents a hybrid security consisting of a stock purchase contract (equity component) requiring the holder to purchase a specified amount of common shares at a specific date, the conversion date, (e.g,. 3-4 years from the date of issue) and a debt security which provide a fixed income stream on a frequent basis (quarterly), including a contract adjustment percentage (which terminates at the purchase date).

The amount of the shares required under the contract will be generally equal to the purchase price of the security (the PIES). This amount is determined using on a preset schedule based on the price of the stock immediately prior to the purchase date.

The number of common shares that the PIES purchaser will receive depends on the average market value of the outstanding common stock over a 20-day period prior to the
conversion date.

These securities were issued and introduced by Lehman Brothers.