Question 1

Employee stock ownership plan is a plan designed to give employees significant stock ownership by their employers.

Accepted Answer

An ESOP is a type of employee benefit plan that allows employees to acquire ownership interest in the company they work for through the purchase of company stock. This can be a way for employers to incentivize and retain employees, while also providing a retirement savings option.

Question 2

Supplemental benefit plans are plans that are available to nonexecutive employees.

Accepted Answer

The answer of Supplemental benefit plans are plans that are...

Question 3

In companies that provide defined benefit plans, if the funding is inadequate to pay the benefits promised, the employees must make up the shortfall.

Accepted Answer

In companies that provide defined benefit plans, if the funding is inadequate to pay the benefits promised, the employer is responsible for making up the shortfall, not the employees.

Question 4

The Employee Retirement Income Security Act (ERISA) gives participants the right to file lawsuits for violations of the law.

Accepted Answer

ERISA provides participants with the right to sue for benefits and breaches of fiduciary duty.

Question 5

Organizations rarely view benefits as an effective retention tool because employees generally have very little understanding of the benefits provided by their employers.

Accepted Answer

Organizations do view benefits as an effective retention tool, and many efforts are made to educate employees about the benefits provided.

Question 6

An employee who is out of work and actively looking for employment can receive up to 26 weeks of pay through unemployment compensation.

Accepted Answer

This is generally true in the United States, although the specific amount of time and pay may vary by state. However, there are certain eligibility requirements for unemployment compensation, and not all individuals may qualify.

Question 7

Most benefits, except for paid time off, are taxed as income to employees.

Accepted Answer

Most benefits provided by employers, such as health insurance, life insurance, and retirement contributions, are not taxed as income to employees.

Question 8

Increases in employer expenditures for health benefits are growing faster than increases in wages for employees.

Accepted Answer

Historically, health benefit costs have often risen at a faster rate than wages, leading to a larger portion of compensation being allocated to health benefits rather than direct salary increases.

Question 9

The United States is the only major developed nation that does not guarantee workers paid sick leave.

Accepted Answer

This statement is true. The United States is the only major developed nation that does not guarantee workers paid sick leave.

Question 10

Increasing the retirement age for employees is a strategy to keep the Social Security program insolvent.

Accepted Answer

Increasing the retirement age for employees is actually a strategy to help keep the Social Security program solvent by reducing the amount of benefits paid out and increasing the number of contributions made by workers.

Question 11

Legally required benefits make up more than half of the total cost of benefits.

Accepted Answer

The answer of Legally required benefits make up more than...

Question 12

Compensation given to an executive if he or she is forced to leave an organization is called golden parachute.

Accepted Answer

This is correct. A golden parachute is a type of compensation package offered to key executives in the event of a merger, acquisition or hostile takeover. If the executive is forced to leave the organization as a result of the merger, acquisition or hostile takeover, they receive financial benefits such as severance pay, bonuses and stock options.

Question 13

Perquisites (Perks) are special benefits, usually noncash items, for executives.

Accepted Answer

Perquisites, also known as perks, are indeed special benefits offered to executives, which may include noncash items such as company cars, memberships to exclusive clubs, or personal assistants.

Question 14

Developed nations are far more likely to provide compulsory, government-sponsored health plans for all citizens.

Accepted Answer

Developed nations, such as Canada, France, and the United Kingdom, typically have universal healthcare systems where healthcare is provided by the government and coverage is available to all citizens. Developing nations may have limited healthcare access or may rely on private healthcare providers.

Question 15

In the U.S., part-time employees are most likely to receive health and life insurance benefits and paid time off and least likely to receive retirement benefits.

Accepted Answer

The answer of In the U.S., part-time employees are most...

Question 16

Employees find 401(k) plans unattractive because these plans require employees to pay higher income taxes during working years.

Accepted Answer

This statement is false. 401(k) plans actually allow employees to lower their taxable income during working years by contributing pre-tax dollars into the plan. It is during retirement when the withdrawals from the plan are taxed.

Question 17

Defined contribution pension plans offer employees retirement benefits that are more secure and predictable.

Accepted Answer

Defined contribution pension plans do not guarantee a specific retirement benefit amount, as the benefits depend on the investment performance of the contributions made.

Question 18

Workers cannot be asked to make financial contributions for coverage under workers' compensation programs.

Accepted Answer

It is the responsibility of employers to provide workers' compensation coverage for their employees, and workers cannot be required to pay for this coverage.

Question 19

The "clawbacks" provision in Dodds-Frank Act allows a company to recover any incentive-based pay that was paid out during the prior three years if it would not have been paid under restated financial statements.

Accepted Answer

The answer of The "clawbacks" provision in Dodds-Frank Act allows...

Question 20

According to the Dodds-Frank Act, publicly listed companies now must allow shareholders to vote on executive compensation.

Accepted Answer

The Dodd-Frank Act includes a provision known as "Say on Pay," which requires publicly listed companies to hold a non-binding vote by shareholders on executive compensation at least once every three years.

Quiz 8: Variable Pay, Executive Compensation, and Benefits