MGMT 456 Ch. 14 Comp of Special Groups

Under the Employee Retirement Income Security Act (ERISA) and the tax code that restrict an employer's ability to provide excessive benefits to executives.

-A benefit plan must cover a wide cross-section of employees. -A benefit plan must provide determinable benefits. -A benefit plan must satisfy certain vesting and nondiscrimination conditions.

Reasons for the current trend of companies hiring contingent workers. The wages and benefits for contingent workers are lower than those for full-time workers: The job satisfaction for contingent workers is always higher than those for full-time workers. Contingent workers show more long-term loyalty and have higher morale than full-time workers. Companies desire to protect themselves in a volatile economy. The productivity of contingent workers is often higher than that of full-time workers.

-Companies desire to protect themselves in a volatile economy. -The wages and benefits for contingent workers are lower than those for full-time workers. -The productivity of contingent workers is often higher than that of full-time workers.

Who among the following form a company's compensation committee? A board of directors A panel of senior supervisors A committee of external auditors A team of human capital analysts

A board of directors

Why do scientists and engineers experience lower salary increments in comparison to employees in other occupations after ten years in their career?

A slow obsolescence (outdatedness) of their knowledge

Which of the following is an important facet of executive compensation that is primarily meant to drive better short-term performance?

Annual bonuses

What is the consequence of companies providing liability insurance to safeguard directors from potential stockholder lawsuits?

Director compensation is reduced.

Which of the following statements is true of the Dodd-Frank Wall Street Reform and Consumer Protection Act?

It gives shareholders the power to vote for or against their organization's proposed compensation plan for its five highest-paid executives.

Which of the following is true about executive benefits? (ERISA - the Employee Retirement Income Security Act)

Many executives receive additional benefits such as life insurance and exemptions from deductibles for health-related costs.

Scientists and engineers are categorized as _______, employees who have specialized training of a scientific nature and whose major duties do not entail supervision of people.

Professionals

* Identify the purposes of the Dodd-Frank Wall Street Reform and Consumer Protection Act. - Improving accountability by eliminating clawback provisions - Protecting taxpayers by putting an end to bailouts - Improving transparency by making say-on-pay votes binding - Safeguarding customers from abusive financial services practices

Protecting taxpayers by putting an end to bailouts Safeguarding customers from abusive financial services practices

Which of the following is a strategy meant to draw workers into supervisory roles?

Raising the base pay of supervisors to some amount that surpasses the base pay of the highest-paid subordinate in the team

What are the controversial executive compensation practices identified by Institutional Shareholder Services (ISS)? - Guaranteeing severance payments with involuntary job loss - Providing extraordinary perks or tax gross-ups - Establishing long-term incentives and capital appreciation plans - Repricing of underwater stock options without the prior approval of shareholders

Repricing of underwater stock options without the prior approval of shareholders Providing extraordinary perks or tax gross-ups

Who among the following covers the critical boundary between an organization and its consumers?

Sales staff

Identify the fundamental components of most executive compensation packages.

Short-term bonuses Long-term incentives Perquisites Base salary

Identify the concerns associated with using stock options as incentives.

Stock options sometimes do not relate as closely as desired to executive performance. Stock options as incentives have the ability to manipulate the system.

Which of the following is true of the compensation received by sales personnel?

The compensation received by sales staff is primarily based on incentives linked to individual performance.

Why are directors well-compensated?

They assume the risks associated with lawsuits.

Which of the following is true of the stock options offered to executives?

They provide executives with an inherent incentive to aim for long-term achievements.

In the context of the compensation of different groups in companies, which of the following is true of special groups in companies?

They tend to be strategically critical to the company.

A common trend in supervisory compensation focuses on an increased use of fixed pay.

This is false. The biggest trend in supervisory compensation centers on increased use of variable pay. Slightly more than half of all companies now have a variable pay component for supervisors, up from 16 percent in prior years.

A potential reason why companies are paying less bonuses to executives is that they want executives to shift their focus from short-term consequences to long-term consequences.

True A trend in executive compensation is that bonuses have become a smaller portion of executive compensation. One potential explanation may pertain to a shift in the time horizon that companies want executives to focus on. Bonuses are a short-term incentive and thus reward good short-term results. The concern was that this caused CEOs to approve decisions with great short-term payouts but not necessarily desirable long-term consequences for the firm.

One way for companies to deal with equity problems that form a major compensation challenge for contingent workers is to promote the idea of boundaryless careers for them.

True Contingent workers may work alongside permanent workers yet often receive lower wages and benefits for the same work. One way to look at contingent workers is to champion the idea of boundaryless careers. At least for high-skilled contingent workers, it is increasingly popular to view careers as a series of opportunities to acquire valuable increments in knowledge and skills.

The views of a compensation committee play an important role in determining executive ____ ____

base salary

In the social comparisons view of CEO salaries, executive pay has a consistent corresponding relationship to:

compensation of lower-level employees.

The great majority of CEO pay is in the form of:

short-term and long-term incentives

According to behavioral scientists, one explanation for executive compensation excesses involves

social comparison

In the context of controversial CEO pay practices, a "golden parachute" refers to:

the compensation given to a CEO when a merger or acquisition results in his or her termination.

In the context of the compensation of different groups in a company, an important characteristic of special groups is that: - their work is not central to the strategic success of the company strategy. - their members are not legally entitled to any employee benefits. - the positions of the members of special groups are characterized by inherent conflicts. - the positions of the members of special groups fit the basic pay model.

the positions of the members of special groups are characterized by inherent conflicts.