Question 1

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

Accepted Answer

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

Question 2

Thedifferential piece-rate system pays a flat rate for all items produced.

Accepted Answer

The differential piece-rate system pays different rates depending on the level of production achieved. It is designed to provide incentives for workers to increase their productivity.

Question 3

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

Accepted Answer

An employee stock ownership plan (ESOP) is a type of retirement plan that allows employees to become part-owners of the company they work for by investing in company stock. It is designed to give employees significant stock ownership by their employers.

Question 4

A stock option plan gives employees the right to purchase an unlimited number of shares of company stock at a specified exercise price for a limited period of time.

Accepted Answer

A stock option plan typically gives employees the right to purchase a limited number of shares of company stock at a specified exercise price for a limited period of time, usually within 10 years.

Question 5

The salary-only approach is useful only when an organization emphasizes generating new sales and accounts.

Accepted Answer

The salary-only approach is not useful only when an organization emphasizes generating new sales and accounts. It can also be useful in other situations, such as when there is a focus on teamwork and collaboration, or when employees are performing routine tasks with predictable outcomes.

Question 6

The focus of gainsharing is to increase "discretionary efforts."

Accepted Answer

Gainsharing programs aim to incentivize employees to put in extra effort beyond their usual responsibilities, which is referred to as discretionary effort.

Question 7

The "clawbacks" provision in Civil Rights Act of 1964 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 "clawbacks" provision is not part of the Civil Rights Act of 1964; it is related to financial regulations, such as the Sarbanes-Oxley Act or Dodd-Frank Act, which address recovery of incentive-based pay.

Question 8

A restricted stock option indicates that company stock shares will be paid as a grant of shares to individuals.

Accepted Answer

A restricted stock option (RSO) is a type of stock option in which a company grants an individual the right to purchase a certain number of shares of company stock at a set price, but with restrictions on when the shares can be sold. The shares are typically granted outright to the individual, rather than being paid out as a grant of shares at a later date.

Question 9

A corporation gives a golden parachutes to encourage anexecutive to stay with the company.

Accepted Answer

Golden parachutes are agreements that provide executives with significant benefits if they are terminated, often used to attract and retain talent but primarily to protect them in case of a takeover or merger.

Question 10

Profit sharinguses employee committees to calculate and pass on profits to the employees.

Accepted Answer

Profit sharing typically involves a predetermined formula or plan to distribute a portion of a company's profits to its employees, rather than using employee committees to calculate and distribute profits.

Question 11

A free rider is a member of the group who contributes the most in a group venture.

Accepted Answer

A free rider is a member of the group who contributes little or nothing to a group venture, while benefiting from the collective efforts of others.

Question 12

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

Accepted Answer

The Dodd-Frank Act requires public companies to conduct say-on-pay votes, allowing shareholders to approve or reject executive compensation packages.

Question 13

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

Accepted Answer

A golden parachute is a compensation package given to executives in the event that they are forced to leave an organization due to a merger or acquisition. It typically includes severance pay, stock options, and other benefits.

Question 14

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

Accepted Answer

Perquisites, also known as perks, are indeed special benefits provided to executives, usually in the form of noncash items such as company cars, housing allowances, country club memberships, and other similar benefits.

Question 15

The straight commission system combines the stability of a salary with the performance aspect of a commission.

Accepted Answer

The straight commission system is solely based on commission and does not include a salary component.

Question 16

A straight salary has no additional commission incentive, while a straight commission has all compensation tied to the incentive.

Accepted Answer

A straight salary is a fixed amount of compensation and does not have any additional commission or bonus incentive, whereas a straight commission compensation plan ties all compensation to the incentive or commission earned.

Question 17

Compensation is given in the form of incentivesbecause it isan effectiveway tomotivate employees,improve corporate performance, and increase stock values.

Accepted Answer

Incentives are often used as a form of compensation to motivate employees to perform better, which in turn can improve corporate performance and increase stock values. Therefore, the statement is true.

Question 18

Profit sharing distributes some portion of organizational profits to employees.

Accepted Answer

Profit sharing is a method to distribute some part of organizational profits to employees, based on a predetermined formula. It is a way to incentivize employees and reward them for their contributions to the success of the company.

Question 19

A draw is a system in which sales representatives can draw advance payments against future commissions.

Accepted Answer

A draw is a common system used in sales where reps can receive a fixed amount of money upfront, which they can later repay through commissions earned.

Question 20

The advantage of a salary-plus-commission system is that it requires the sales representative to sell to receive any form of payment.

Accepted Answer

A salary-plus-commission system provides a base salary in addition to commission earned on sales, ensuring the sales representative receives some form of payment regardless of sales performance.

Quiz 12: Variable Pay and Executive Compensation