Comp. Ch. 14

Which of the following is not a likely component of the compensation package for scientists and engineers? A. Large incentives based upon personal performance B. Base salary C. Bonuses based upon meeting project deadlines D. Patents and publications

A. Large incentives based upon personal performance

Which of the following is an example of a popular perk offered to executives? A. Loans at low or no interest B. Office space at a company business location C. An executive dining room D. Additional secretarial services devoted to company matters

A. Loans at low or no interest

Which of the following is the most popular executive perk offered by most companies (91 percent)? A. Physical examination B. Income tax preparation C. An executive dining room D. A company car

A. Physical examination

Customer satisfaction indices are increasingly popular because of _____. A. a greater emphasis on quality B. the loss of accounts C. sustaining profit improvement D. decreasing employee satisfaction

A. a greater emphasis on quality

Popular stereotypes of salespeople characterize them as being heavily motivated by _____. A. financial compensation B. personal growth and job security C. recognition and appreciation D. promotional opportunities

A. financial compensation

Research shows that the best predictor of executive pay, by far, is _____. A. firm size B. the number of "insiders" on the board of directors C. the industry in which the firm operates D. firm performance

A. firm size

The biggest trend in supervisory pay is _____. A. increased use of variable pay B. paying overtime at time-and-a-half C. maintaining a differential above the highest paid subordinate D. offering stock options and enhanced benefits

A. increased use of variable pay

The _____ component of executive compensation has grown the most since the 1970s. A. long-term incentives B. perks C. short-term incentives D. base salary

A. long-term incentives

Annual bonuses often play a major role in executive compensation and are primarily designed to _____. A. motivate better short-term performance B. satisfy unique needs and preferences C. meet the needs of employees to receive rewards, reinforcements, and general counseling D. meet production goals

A. motivate better short-term performance

A _____ is a cash or stock award determined by an increase in stock price at a fixed future date. A. phantom stock plan B. performance share/unit plan C. stock appreciation right D. nonqualified stock option

A. phantom stock plan

Nonqualified stock options involve _____. A. purchase of stock at a stipulated price, not conforming with Internal Revenue Code B. cash or stock award determined by increase in stock price at a fixed future date C. cash or stock award determined by increase in stock price during any time chosen in the option period D. grant of stock at a reduced price with the condition that it may not be sold before a specified date

A. purchase of stock at a stipulated price, not conforming with Internal Revenue Code

The most important and most difficult part of sales compensation is _____. A. setting sales quotas B. setting commission rates C. determining fair bonuses D. assessing differences in sales territories

A. setting sales quotas

Executives, supervisors and sales staff often receive special compensation treatment because _____. A. these jobs face conflicting demands B. these jobs are exempt under FLSA C. recruiting and retention is difficult for these jobs D. these jobs are covered under the Sarbanes-Oxley Act

A. these jobs face conflicting demands

The differential between supervisors' base pay and their highest paid subordinate is typically _____ percent. A. 10-20 B. 5- 30 C. 15- 20 D. 15- 35

B. 5- 30

In which of the following situations would engineering jobs most likely be treated as a special compensation group? A. Mechanical and civil engineers employed at a large city B. Computer engineers employed at a software firm C. Mechanical engineers employed at a farm equipment manufacturer D. Environmental engineers at a waste disposal company

B. Computer engineers employed at a software firm

Which of the following is not a reason for the move to contingent workers? A. Cost savings B. Employees who accept the idea of bounded careers may view contingent status as part of a fast-track developmental sequence C. The added flexibility such employment offers the employer D. In today's fast-paced marketplace, lean and flexible are desirable characteristics, and contingent workers offer these options

B. Employees who accept the idea of bounded careers may view contingent status as part of a fast-track developmental sequence

At the time it is granted, which of the following has no tax implications for the executive? A. Phantom stock plans B. Incentive stock options C. Stock appreciation rights D. Performance share/unit plans

B. Incentive stock options

Which of the following is a major factor that influences the design of sales compensation packages? A. Diversity of buyers' needs and preferences B. The nature of people who enter the sales profession C. Political environment D. The company's size

B. The nature of people who enter the sales profession

A useful tool for determining the true worth of an entire executive compensation package is _____. A. the balance sheet B. a tally sheet C. the executive's tax return D. an audit of the executive's income and expenses

B. a tally sheet

The _____ theory argues that executives make decisions that maximize their rewards. A. economic valuation B. agency C. social comparison D. tournament

B. agency

If improved account retention became a major focus of attention, the performance measure stressed would be _____. A. gross margin on sales or price per unit B. percentage account erosion C. a volume measure D. a customer satisfaction index

B. percentage account erosion

Which of the following is not an indicator of whether sales quotas are reasonable? A. Can the sales force explain how the quotas were set? B. Do high performers consistently hit their target? C. Are company profit levels acceptable? D. Do low performers show improvement over time?

C. Are company profit levels acceptable?

Which of the following is not a reason for the recent decline in the use of stock options in executive pay? A. There has been growing pressure to expense stock options in annual reports. B. Stockholders dissatisfaction with treating stock options as a free good. C. Financial Accounting Standard number 313 raises the cost of using stock options. D. Stock options do not pay for executive performance.

C. Financial Accounting Standard number 313 raises the cost of using stock options.

Which of the following benefits is not tied to earnings? A. Life insurance B. Disability insurance C. Vehicle loans D. Pensions

C. Vehicle loans

The most common approach to motivating executives to make decisions that are in the best interests of stockholders is _____. A. high base salaries with few bonuses B. average base salaries with significant firm performance bonuses C. a long-term incentive plan using stock options D. average base salary with performance-based perks

C. a long-term incentive plan using stock options

In a maturing market, compensation should emphasize _____. A. low base salary and high sales commissions B. average base salary and large bonuses C. high base salary and performance-based pay based upon customer satisfaction D. market competitive salaries and good perks

C. high base salary and performance-based pay based upon customer satisfaction

The proportion of outside-to-inside the company members of the board of directors in two-thirds of companies is _____. A. more insiders than outsiders B. approximately the same of each C. more outsiders than insiders D. there is no clear trend

C. more outsiders than insiders

Gross margin on sales or price per unit would be the appropriate measurement if the goal is _____. A. increased sales growth B. improved account retention C. profit improvement D. greater emphasis on quality

C. profit improvement

The _____ theory argues that executive pay rises to maintain the same relationship to the salaries of lower-level employees. A. economic approach B. team production C. social comparison D. agency

C. social comparison

All of the following except _____ would be considered a special compensation group. A. sales staff B. contingent workers C. workers covered by the ADA D. professionals

C. workers covered by the ADA

Today, top executive pay is more than _____ times the pay of the average worker. A. 20 B. 42 C. 275 D. 364

D. 364

_____ curve expresses the relationship between years since last degree, performance, and salary. A. The Phillips B. The marginal productivity C. A tenure D. A maturity

D. A maturity

Which of the following is not one of the clauses relating to benefits employers can provide executives? A. Must cover 80 percent of employees B. Must be determinable C. Must meet specific vesting requirements D. Average value of benefits for low-paid employees must be at least 90 percent of those for highly paid employees

D. Average value of benefits for low-paid employees must be at least 90 percent of those for highly paid employees

_____ is (are) a relatively uncommon form of board of directors' pay. A. Approximately $55,000 in cash B. Long-term incentives C. Both cash and long-term incentives D. Tying pay to stock performance

D. Tying pay to stock performance

Anyone hired through a temporary-help agency, on an on-call basis, or as an independent contractor is a _____. A. primary worker B. regular worker C. permanent worker D. contingent worker

D. contingent worker

In recent years, some firms have tried to deal with the plateau effect and also accommodate the different career motivations of mature scientists and engineers through a(n) _____. A. individual-career ladder B. alternative career path C. military-style career ladder D. dual-career ladder

D. dual-career ladder

When selling the product requires a long training time and also considerable time to develop an effective sales presentation, the compensation system should _____. A. set specific and challenging sales goals B. have low base pay and high commissions C. be straight commission D. have a large base-pay component

D. have a large base-pay component

A _____ is a cash or stock award earned through achieving specific goals and is taxed as ordinary income. A. nonqualified stock option B. phantom stock plan C. restricted stock plan D. performance share/unit plan

D. performance share/unit plan

Equity is the major compensation challenge for _____. A. sales staff B. professionals C. executives D. supervisors

D. supervisors

If the business goal is to increase sales growth, an organization might use a _____. A. percentage account erosion B. gross margin on sales or price per unit C. customer satisfaction index D. volume measure

D. volume measure