Question 1

What was the median annual earnings for all U.S.civilian workers in 2009?

Accepted Answer

A)   $33,190
B)   $41,778
C)   $46,120
D)   $51,980E) B) and C)
F) A) and B)

Question 2

In the end,Yolanda beat Tristen and Michel in a series of competitions among top-level managers to become CEO of National LemGlass.Which compensation theory did the company probably use?

Accepted Answer

A)   tournament
B)   competition
C)   comparison
D)   agencyE) A) and B)
F) None of the above

Question 3

This type of executive bonus plan is similar to the appraisal system used to determine merit increases for non-executive employees.

Accepted Answer

A)   performance-incentive
B)   target
C)   performance-allocation
D)   performance-contingentE) A) and B)
F) None of the above

Question 4

This is the difference between the stock price at the time of purchase and the lower stock price at the time an executive receives the stock option.

Accepted Answer

A)   disposition value
B)   discounted value
C)   fair market value
D)   capital gainsE) C) and D)
F) A) and D)

Question 5

Under SEC rules,which of the following is true?

Accepted Answer

A)   Shareholders may be subject to personal liability for paying excessive executive compensation.
B)   Publicly held corporations must disclose executive compensation information to shareholders, but not the public.
C)   Board of director members can sue a corporation for excessive executive compensation.
D)   Board of director members may be subject to personal liability for paying excessive executive compensation.E) A) and D)
F) A) and B)

Question 6

Executives receive ________ as the difference between the stock price at the time of purchase and the lower stock price at the time an executive receives the stock option.

Accepted Answer

The answer of Executives receive ________ as the difference between...

Question 7

A ________ entails an examination of a company's external market context along with internal factors.

Accepted Answer

The answer of A ________ entails an examination of a...

Question 8

The SEC's Summary Compensation Table contains data covering how many years?

Accepted Answer

A)   3
B)   5
C)   7
D)   10E) A) and B)
F) A) and C)

Question 9

These rights provide employees with an opportunity to purchase a number of stocks at a designated price within a specified period of time.

Accepted Answer

A)   stock option
B)   stock grant
C)   disposition
D)   exercise of one's grantE) A) and B)
F) C) and D)

Question 10

These entitle an executive to purchase company stock in the future for a predetermined price.

Accepted Answer

A)   nonstatutory stock options
B)   incentive stock options
C)   restricted stock options
D)   phantom stock optionsE) A) and D)
F) A) and C)

Question 11

When he became CEO,Duane was given a stock option that does not require him to exercise his options in order to receive income.Which plan is it?

Accepted Answer

A)   stock appreciation rights
B)   discount stock
C)   restricted stock
D)   golden parachuteE) All of the above
F) A) and B)

Question 12

A ________ stock plan is an arrangement whereby executives receive a bonus that is equivalent to either the value of company shares or the increase in that value over time.

Accepted Answer

The answer of A ________ stock plan is an arrangement...

Question 13

After the recent merger of ABC and XYZ Airlines,the former CFO of XYZ Airlines,John,lost his employment in the newly merged airline.Which compensation agreement extends pay and benefits for John?

Accepted Answer

A)   discount stock option plans
B)   incentive stock options
C)   phantom stock
D)   golden parachutesE) C) and D)
F) B) and D) D

Question 14

As the vice-president,Sheila will receive short-term incentive compensation awards based on which two conditions?

Accepted Answer

A)   her rank and compensation level
B)   her age and department
C)   her department and rank
D)   her age and compensation levelE) A) and B)
F) B) and C) A

Question 15

In 2009,the average CEO earned how much more annually than the average food service worker?

Accepted Answer

A)   12 times greater
B)   38 times greater
C)   74 times greater
D)   156 times greaterE) A) and B)
F) A) and C)

Question 16

Under the Troubled Assets Relief Program (TARP) ,banks with financial assistance from the federal government can only deduct how much annually for an executive's pay as a business expense?

Accepted Answer

A)   $100,000
B)   $200,000
C)   $500,000
D)   $1,000,000E) C) and D)
F) None of the above

Question 17

Discuss the six forms of deferred (stock)compensation.

Accepted Answer

Incentive stock options provide executives with the opportunity to purchase company stock,often at a discounted price.As a result,executives realize capital gains with their purchase.Additionally,the federal government accords favorable tax treatment to these purchases in that these gains are not taxed until the disposition of the stock.
Nonstatutory stock options are similar to incentive stock options.However,the capital gains are taxed at the time of purchase.Despite this cost,executives' tax liability over the long term is lower.
Restricted stock provides ownership control to the executive after a predetermined period,often 5 to 10 years.A further restriction is that if executives terminate their employment prior to the end of the designated period,they must sell the stock back to the company at the original discounted price.However,similar to incentive stock options,the executive does not pay tax until the restriction period ends.
Phantom stock provides executives with "hypothetical" company stocks rather than actual shares of company stock.Like restricted stock,these shares are converted into company stock after a predetermined period.Executives must meet two conditions: 
1)executives must remain employed for a specified period,and 2)executives must retire from the company.Upon meeting these requirements,executives will receive income equivalent to the value of the increase in stock to the date the phantom stock was first granted.As with several of the other deferred stock options,executives will pay a capital gains tax after they convert the phantom shares to real shares.
Discount stock option plans are similar to nonstatutory stock option plans.However,the company grants stock options at rates far below the stock's fair market value on the date the option is granted.
Stock appreciation rights grant the executive income at the end of a designated period without actually having to exercise their stock rights.Rather,the company grants the difference in price between the time the stock was granted and its current fair market value.Executives then pay tax on any income from gains in stock value when they exercise their stock rights.

Question 18

________ bonuses are awarded to executives by boards of directors on an elective basis.

Accepted Answer

The answer of ________ bonuses are awarded to executives by...

Question 19

The SEC requires compensation information on the CEO and how many of the highest paid executives?

Accepted Answer

A)   10
B)   7
C)   4
D)   2E) B) and C)
F) None of the above

Question 20

________ provide pay and benefits to executives after a termination that results from a change in ownership or merger.

Accepted Answer

The answer of ________ provide pay and benefits to executives...

Exam 12: Compensating Executives

What was the median annual earnings for all U.S.civilian workers in 2009?

Correct Answer
verified

In the end,Yolanda beat Tristen and Michel in a series of competitions among top-level managers to become CEO of National LemGlass.Which compensation theory did the company probably use?

Correct Answer
verified

This type of executive bonus plan is similar to the appraisal system used to determine merit increases for non-executive employees.

Correct Answer
verified

This is the difference between the stock price at the time of purchase and the lower stock price at the time an executive receives the stock option.

Correct Answer
verified

Under SEC rules,which of the following is true?

Correct Answer
verified

Executives receive ________ as the difference between the stock price at the time of purchase and the lower stock price at the time an executive receives the stock option.

Correct Answer
verified

A ________ entails an examination of a company's external market context along with internal factors.

Correct Answer
verified

The SEC's Summary Compensation Table contains data covering how many years?

Correct Answer
verified

These rights provide employees with an opportunity to purchase a number of stocks at a designated price within a specified period of time.

Correct Answer
verified

These entitle an executive to purchase company stock in the future for a predetermined price.

Correct Answer
verified

When he became CEO,Duane was given a stock option that does not require him to exercise his options in order to receive income.Which plan is it?

Correct Answer
verified

A ________ stock plan is an arrangement whereby executives receive a bonus that is equivalent to either the value of company shares or the increase in that value over time.

Correct Answer
verified

After the recent merger of ABC and XYZ Airlines,the former CFO of XYZ Airlines,John,lost his employment in the newly merged airline.Which compensation agreement extends pay and benefits for John?

Correct Answer
verified
D

As the vice-president,Sheila will receive short-term incentive compensation awards based on which two conditions?

Correct Answer
verified
A

In 2009,the average CEO earned how much more annually than the average food service worker?

Correct Answer
verified

Under the Troubled Assets Relief Program (TARP) ,banks with financial assistance from the federal government can only deduct how much annually for an executive's pay as a business expense?

Correct Answer
verified

Discuss the six forms of deferred (stock)compensation.

________ bonuses are awarded to executives by boards of directors on an elective basis.

Correct Answer
verified

The SEC requires compensation information on the CEO and how many of the highest paid executives?

Correct Answer
verified

________ provide pay and benefits to executives after a termination that results from a change in ownership or merger.

Correct Answer
verified

Exam 12: Compensating Executives

What was the median annual earnings for all U.S.civilian workers in 2009?

Correct AnswerverifiedShow Answer

In the end,Yolanda beat Tristen and Michel in a series of competitions among top-level managers to become CEO of National LemGlass.Which compensation theory did the company probably use?

Correct AnswerverifiedShow Answer

This type of executive bonus plan is similar to the appraisal system used to determine merit increases for non-executive employees.

Correct AnswerverifiedShow Answer

This is the difference between the stock price at the time of purchase and the lower stock price at the time an executive receives the stock option.

Correct AnswerverifiedShow Answer

Under SEC rules,which of the following is true?

Correct AnswerverifiedShow Answer

Executives receive ________ as the difference between the stock price at the time of purchase and the lower stock price at the time an executive receives the stock option.

Correct AnswerverifiedShow Answer

A ________ entails an examination of a company's external market context along with internal factors.

Correct AnswerverifiedShow Answer

The SEC's Summary Compensation Table contains data covering how many years?

Correct AnswerverifiedShow Answer

These rights provide employees with an opportunity to purchase a number of stocks at a designated price within a specified period of time.

Correct AnswerverifiedShow Answer

These entitle an executive to purchase company stock in the future for a predetermined price.

Correct AnswerverifiedShow Answer

When he became CEO,Duane was given a stock option that does not require him to exercise his options in order to receive income.Which plan is it?

Correct AnswerverifiedShow Answer

A ________ stock plan is an arrangement whereby executives receive a bonus that is equivalent to either the value of company shares or the increase in that value over time.

Correct AnswerverifiedShow Answer

After the recent merger of ABC and XYZ Airlines,the former CFO of XYZ Airlines,John,lost his employment in the newly merged airline.Which compensation agreement extends pay and benefits for John?

Correct AnswerverifiedD

As the vice-president,Sheila will receive short-term incentive compensation awards based on which two conditions?

Correct AnswerverifiedA

In 2009,the average CEO earned how much more annually than the average food service worker?

Correct AnswerverifiedShow Answer

Under the Troubled Assets Relief Program (TARP) ,banks with financial assistance from the federal government can only deduct how much annually for an executive's pay as a business expense?

Correct AnswerverifiedShow Answer

Discuss the six forms of deferred (stock)compensation.

________ bonuses are awarded to executives by boards of directors on an elective basis.

Correct AnswerverifiedShow Answer

The SEC requires compensation information on the CEO and how many of the highest paid executives?

Correct AnswerverifiedShow Answer

________ provide pay and benefits to executives after a termination that results from a change in ownership or merger.

Correct AnswerverifiedShow Answer

Correct Answer
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D

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A

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