ch 14
The association between scientist/engineer compensation and years of experience in the labor market is determined by _______________
maturity curves
Which of the following is an important facet of executive compensation that is primarily meant to drive better short-term performance?
Annual bonuses
Which of the following unit rate sales compensation plans offers one rate up to a target level and then lesser rates thereafter?
Declining commissions
True or false: The CEOs of companies that are performing well relative to competitors are more likely to have pay linked to annual performance.
False
Identify the concerns associated with using stock options as incentives. (Check all that apply.)
Stock options sometimes do not relate as closely as desired to executive performance. Stock options as incentives have the ability to manipulate the system.
Inside reps
They perform sales calls or sales support functions.
Identify the clauses under the Employee Retirement Income Security Act (ERISA) and the tax code that restrict an employer's ability to provide excessive benefits to executives. (Check all that apply.)
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.
Who among the following form a company's compensation committee?
A board of directors
Identify the reasons for the current trend of companies hiring contingent workers. (Check all that apply.)
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.
Scientists and engineers are categorized as ________
professional
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
Identify the types of sales compensation plans. (Check all that apply.)
Add-on plans Unit rate plans
In the context of sales compensation plans, which of the following unit rate plans has the same rate for each unit sold?
Flat commissions
Who among the following covers the critical boundary between an organization and its consumers?
Sales staff
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.
Outside reps
They usually travel and visit potential customers.
The professional track
This progresses with rising technical responsibility.
The views of a compensation committee play an important role in determining executive
base pay
______suggests that CEOs are irresolute about stock options, inclined to be risky and to accumulate future wealth but also inclined to be cautious about preserving current wealth.
behavioral agency theory
The job of a supervisor is categorized as
exempt
According to behavioral scientists, one explanation for executive compensation excesses involves _____________
social comparisons
In the context of the compensation of different groups in a company, an important characteristic of special groups is that _____.
the positions of the members of special groups are characterized by inherent conflicts
True or false: A common trend in supervisory compensation focuses on an increased use of fixed pay.
False
Identify the fundamental components of most executive compensation packages. (Check all that apply.)
Long-term incentives Base salary Short-term bonuses Perquisites
Identify the purposes of the Dodd-Frank Wall Street Reform and Consumer Protection Act. (Check all that apply.)
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
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.
Which of the following is true of corporate directors?
They play a crucial role in deciding executive compensation.
True or false: 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
What are the controversial executive compensation practices identified by Institutional Shareholder Services (ISS)? (Check all that apply.)
Providing extraordinary perks or tax gross-ups Repricing of underwater stock options without the prior approval of shareholders
Which of the following is a characteristic of external directors?
They are not obliged to the CEO who appoints them.
The managerial ladder
This offers promotions with more responsibility for managing people.
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 of their knowledge
According to the agency theory, which of the following is true of CEOs?
CEOs make decisions that fail to represent the economic well-being of the organization and its stockholders.
True or false: A potential reason why companies are paying less bonuses to executives is that they want executives to shift their focus from long-term consequences to short-term consequences.
True
According to social scientists, executive pay has a consistent corresponding relationship to _____.
compensation of lower-level employees
High barriers to entry
Compensation for selling these products includes a large base-pay component. Considerable training is required for sales personnel to become effective in this field.
Low barriers to entry
Compensation for selling these products includes a large incentive component. The knowledge needed to make an effective sales presentation for these products is relatively easy to acquire.
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.
The major challenge in compensating supervisors centers on _____.
fairness in pay
Why are directors well-compensated?
They assume the risks associated with lawsuits.
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
Compiling data on salaries as a function of years since a scientist/engineer last received a degree is meant to _____.
determine the half-life of technical obsolescence
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.
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.
A board of directors includes individuals from both inside and outside a firm who primarily _____.
give tactical advice on decision making
____________ offers a solution for firms dealing with the salary plateau effect and attempts to accommodate the career intentions of senior scientists and engineers.
dual career ladder
What is the consequence of companies providing liability insurance to safeguard directors from potential stockholder lawsuits?
Director compensation is reduced.
According to the agency theory, executive compensation should be devised to ensure that executives keep in mind the interests of _____ when making decisions.
shareholders
According to the economic approach to understanding executive compensation, the worth of CEOs, or their subordinates, must relate closely to _____.
some measure of company growth and profitability
