Compensation Administration - Chapter 14 Questions

The differential between supervisors' base pay and their highest paid subordinate is typically ________ percent. A) 0 to 5 B) 5 to 30 C) 30 to 50 D) 50 to 90

B) 5 to 30

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.

Today, top executive pay is more than ________ times the pay of the average worker. A) 1,500 B) 2,000 C) 900 D) 300

D) 300

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.

Working through a temporary-help agency usually means: A) high recognition for the work done. B) lower work stress in comparison to permanent employees. C) higher benefits in comparison to permanent employees. D) low pay in administrative or day labor positions.

D) low pay in administrative or day labor positions.

A recent article analyzing the results from over 100 executive pay studies shows that the best predictor of executive pay is by far 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.

Hannah is the CEO of JF Corp., a steel manufacturing company. She finds that the market is exhibiting the signs of a maturing market. She wants to revise the compensation package for her sales employees to adapt to the changing market conditions. In this case, Hannah is most likely to: A) increase base pay. B) provide a commission-based incentive plan. C) provide incentives based on new customer generation. D) include a significant incentive component.

A) increase base pay.

A(n) ________ uses cash or stock award that is determined by an increase in stock price at a fixed future date. A) phantom stock plan B) incentive stock option C) restricted stock plan D) nonqualified stock option

A) phantom stock plan

Which of the following is the most popular executive perk offered by most companies? A) Executive physicals B) Payment of club dues C) Family spousal travel D) Corporate housing

A) Executive physicals

Which of the following often go for extended periods in the field with little supervision? A) Sales staff B) Top management C) Supervisors D) Professional employees

A) Sales staff

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.

The biggest trend in supervisory pay centers on A) increased use of variable pay. B) payment of wages that equal subordinate pay. C) paying a wage that is above that of the highest paid superior. D) payment of higher wages without benefits.

A) increased use of variable pay.

Annual bonuses often play a major role in executive compensation and are primarily designed to A) motivate better short-term performance. B) reduce overtime pay. C) decrease pay differentials between supervisors and subordinates. D) increase employee turnover.

A) motivate better short-term performance.

Nonqualified stock options require A) purchase of stock at a stipulated price, not conforming with the Internal Revenue Code. B) a cash or stock award to be determined by an increase in stock price at a fixed future date. C) a cash or stock award to be determined by an increase in stock price during any time chosen in the option period. D) a 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 the Internal Revenue Code.

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

A) these jobs face conflicting demands.

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

B) Computer engineers employed at a software firm

NaxWell Corp. sells a smart wristband that, apart from monitoring heart rate and blood pressure, also reminds users to stand and walk every half hour. As part of its promotional efforts, a celebrity starts wearing the wristband, thereby increasing its popularity and ease of sale. Which of the following is most likely to happen? A) NaxWell will set lower sales targets for its employees. B) NaxWell is likely to increase base salaries and decrease incentives. C) NaxWell is likely to lower its executive compensation in order to increase stock price. D) NaxWell will hire only contingent workers.

B) NaxWell is likely to increase base salaries and decrease incentives.

When designing a sales compensation plan, it should be kept in mind that: A) salespeople rank recognition as their number-one motivator. B) salespeople under an incentive system will view customer service as an imposition. C) compensation systems are independent of the nature of a product or service. D) commissions for sales volume reduce the incentive to sell.

B) salespeople under an incentive system will view customer service as an imposition.

With easily sold products, A) companies prefer a more aggressive sales force. B) the base compensation tends to be more important. C) the incentives provided in the form of commissions tend to be more important. D) companies tend to set lower sales targets.

B) the base compensation tends to be more important.

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.

Leah, the CEO of SteadyResults Corp., feels that she is underpaid, so she hires a compensation consultant to survey actual competitors of the company. According to agency theory, if SteadyResults performs poorly, her salary will most likely: A) remain the same as CEO salary is based only on performance. B) be withheld and paid at a later date as the company is doing poorly. C) be increased in order to retain her. D) remain the same as the company is doing poorly.

C) be increased in order to retain her.

A compensation consultant is hired to survey actual competitors of the company: A) if the CEO is overpaid and the company is doing poorly. B) if the CEO is truly overpaid. C) if the CEO is truly underpaid. D) if the CEO is not underpaid and the company is doing poorly.

C) if the CEO is truly underpaid.

________ 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

A(n) ________ uses cash or stock award if specific goals are achieved. A) nonqualified stock option B) incentive stock option C) restricted stock plan D) performance share plan

D) performance share plan

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

C) The social comparison theory