Question 1

The Scanlon plan is designed to:

Accepted Answer

The Scanlon plan provides employees with a bonus based on tangible savings in labor costs and is designed to encourage employees to suggest changes that might increase productivity.

Question 2

Altitude Systems Inc.wants to plan stock grants and stock options for its managerial personnel.In this context,discuss all the available stock option-related plans that the company needs to know.

Accepted Answer

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Question 3

Which of the following is true about self-directed work teams?

Accepted Answer

Self-directed work teams, also called self-managed work teams, are teams of employees that accomplish tasks within their area of responsibility without direct supervision. Most companies that use self-directed work teams usually incorporate some type of group incentive pay based on the performance of the respective work teams.

Question 4

What is the primary advantage of an individual incentive plan? Also identify a related disadvantage.

Accepted Answer

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Question 5

Which of the following is a major benefit of employee stock ownership plans to stockholders?

Accepted Answer

Employee stock ownership plans (ESOPs) provide stockholders a ready market to sell stock. Another appealing feature of ESOPs is that they have specific tax advantages for both the organization and the employees.

Question 6

Discuss piece rate plans,plans based on time saved,and plans based on commissions.

Accepted Answer

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Question 7

Which of the following is true regarding stock options for nonmanagerial personnel?

Accepted Answer

When stock options are mentioned, most people think only about stock options for executives and managerial personnel. Nonmanagerial personnel also widely hold stock options, however.

Question 8

What are the two basic requirements of an effective incentive pay plan?

Accepted Answer

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Question 9

Discuss the major issues related to the executive pay controversy.

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Question 10

Discuss the difference between a bonus and merit pay plan.

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Question 11

The management at Virtue Infra Inc.has decided to reward good performance within the organization through group incentives.Which of the following is a negative impact the firm will have to face as a result of using group incentives?

Accepted Answer

A disadvantage of group incentives is that the members of a group may not perceive a direct relationship between their individual performances and that of the group.

Question 12

In employee stock ownership plans:

Accepted Answer

An employee stock ownership plan (ESOP) is established when a company sets up a trust, called an employee stock ownership trust (ESOT), to acquire a specified number of shares of its own stock for the benefit of participating employees.

Question 13

Describe employee stock ownership plans (ESOPs).

Accepted Answer

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Question 14

Most Scanlon plans pay ____ percent of the bonus fund to employees.

Accepted Answer

Most Scanlon plans pay 75 percent of the bonus fund to employees and 25 percent to the company.

Question 15

A new law was passed that prohibits cash bonuses and other incentives for the five most-senior officers and the 20 highest-paid executives at companies that have received funds under the:

Accepted Answer

A new law was passed that prohibits cash bonuses and other incentives for the five most-senior officers and the 20 highest-paid executives at companies that have received funds under the Troubled Asset Relief Program (TARP). The bill further stipulates that any bonuses given out by these companies would have to be in the form of long-term incentives, such as restricted stock, and that the incentives cannot be cashed out until all the TARP money has been repaid.

Question 16

Discuss group incentive plans.

Accepted Answer

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Question 17

Which of the following require(s)an annual nonbinding shareholder vote regarding executive compensation?

Accepted Answer

"Say-on-pay" proposals require an annual nonbinding shareholder vote regarding executive compensation. Most say-on-pay proposals set up advisory boards to oversee ex­ecutive pay, express shareholder views, and vote on executive compensation.

Question 18

A Scanlon plan is ordinarily a(n)____ incentive.

Accepted Answer

Scanlon plan is an organizationwide incentive plan that provides employees with a bonus based on tangible savings in labor costs. Under the Scanlon plan, any cost savings are paid to all employees, not just to the employees who made the suggestions.

Question 19

Discuss long-term performance plans for managerial personnel.

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Question 20

Describe Scanlon-type plans.

Accepted Answer

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Quiz 14: Incentive Pay Systems