Question 1

A useful tool for determining the true worth of an entire executive compensation package is _____.

Accepted Answer

A tally sheet would be the best tool for determining the true worth of an entire executive compensation package. A tally sheet allows for the organization and calculation of various components of the package, such as base salary, bonuses, stock options, pension plans, and other benefits. By tallying up all of these components, a more accurate and comprehensive understanding of the true worth of the package can be obtained. The other options, such as the balance sheet, tax return, and audit, may provide some helpful information, but are not as specific and tailored to determining executive compensation.

Question 2

Which of the following is not one of the clauses relating to benefits employers can provide executives?

Accepted Answer

D

Question 3

The differential between supervisors' base pay and their highest paid subordinate is typically _____ percent.

Accepted Answer

The differential between supervisors' base pay and their highest paid subordinate is typically between 5-30 percent.

Question 4

In which of the following situations would engineering jobs most likely be treated as a special compensation group?

Accepted Answer

Computer engineers at a software firm are often treated as a special compensation group due to the high demand and competitive market for tech talent, which can lead to unique compensation packages.

Question 5

Equity is the major compensation challenge for _____.

Accepted Answer

The answer of Equity is the major compensation challenge for...

Question 6

Executives,supervisors and sales staff often receive special compensation treatment because _____.

Accepted Answer

The answer of Executives,supervisors and sales staff often receive special...

Question 7

Which of the following benefits is not tied to earnings?

Accepted Answer

Vehicle loans are not tied to earnings, as they are based on the value of the vehicle being purchased and the borrower's creditworthiness. The other options (life insurance, disability insurance, and pensions) are all related to earnings or income in some way. Life insurance provides financial support to beneficiaries if the insured person dies, disability insurance provides income replacement if the insured person becomes disabled and unable to work, and pensions are retirement benefits based on a person's earnings and years of service.

Question 8

Nonqualified stock options involve _____.

Accepted Answer

Nonqualified stock options refer to options that do not meet the requirements of the Internal Revenue Code for incentive stock options. These options allow employees to purchase company stock at a stipulated price, which is typically lower than the market price at the time of grant. However, unlike incentive stock options, nonqualified stock options do not provide any tax advantages to the employee.

Question 9

All of the following except _____ would be considered a special compensation group.

Accepted Answer

Sales staff, contingent workers, and professionals are all examples of different types of employees or workers. Workers covered by the ADA (Americans with Disabilities Act) are not a separate group of employees, but rather a group that may require specific accommodations or considerations in the workplace due to their disability status.

Question 10

The _____ component of executive compensation has grown the most since the 1970s.

Accepted Answer

Research shows that the long-term incentive component of executive compensation has grown significantly since the 1970s, while the portion of executive pay made up of base salary and perks has remained relatively stable.

Question 11

Which of the following is not a reason for the recent decline in the use of stock options in executive pay?

Accepted Answer

Financial Accounting Standard number 313 does not exist, making this option incorrect as a reason for the decline in the use of stock options.

Question 12

A _____ is a cash or stock award determined by an increase in stock price at a fixed future date.

Accepted Answer

The answer of A _____ is a cash or stock...

Question 13

Which of the following is an example of a popular perk offered to executives?

Accepted Answer

Executives often receive loans at low or no interest as a perk, which is a financial benefit not typically available to other employees.

Question 14

_____ is (are)a relatively uncommon form of board of directors' pay.

Accepted Answer

Tying pay to stock performance is relatively uncommon for board of directors' pay compared to other forms like cash or long-term incentives.

Question 15

Annual bonuses often play a major role in executive compensation and are primarily designed to _____.

Accepted Answer

Annual bonuses are a form of short-term incentive designed to motivate better performance by offering a reward for achieving or exceeding specific targets. They are commonly used to drive short-term results and help align executives with organizational priorities.

Question 16

At the time it is granted,which of the following has no tax implications for the executive?

Accepted Answer

Incentive stock options have no tax implications for the executive at the time they are granted. However, there may be tax implications when the options are exercised or sold. The other options listed may have tax implications at the time of grant.

Question 17

The proportion of outside-to-inside the company members of the board of directors in two-thirds of companies is _____.

Accepted Answer

The question states that in two-thirds of companies, there are more outsiders than insiders on the board of directors. Therefore, the best choice is C - more outsiders than insiders.

Question 18

The biggest trend in supervisory pay is _____.

Accepted Answer

The trend in supervisory pay is for the increased use of variable pay, such as bonuses and incentives, rather than traditional fixed salaries. This allows for greater alignment with organizational performance and individual performance, and can tie compensation directly to achieving specific goals and targets.

Question 19

Which of the following is the most popular executive perk offered by most companies (91 percent)?

Accepted Answer

Physical examinations are commonly offered as an executive perk to ensure the health and well-being of key company leaders.

Question 20

A _____ is a cash or stock award earned through achieving specific goals and is taxed as ordinary income.

Accepted Answer

Performance share/unit plans are designed to reward employees for achieving specific goals or milestones. The award can be in the form of cash or stock, and it is typically taxed as ordinary income when received. Nonqualified stock options, phantom stock plans, and restricted stock plans all have different tax implications and may be awarded for different reasons.

Quiz 14: Compensation of Special Groups