Chat with AIExam 12: Compensating Executives
Who are the key players in setting executive compensation? Detail their different roles.How does SEC affect their roles?
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VerifiedExecutive compensation consultants make recommendations about what and how much to include in executive compensation packages based on strategic analyses.However,consultants often find themselves in a precarious position in that they must recommend lucrative compensation packages so that they will make a favorable impression on the CEO who hired them.
Boards of directors represent the interests of the shareholders by measuring executive decisions.A conflict of interest may arise in that CEOs often nominate candidates for board membership,and it is the board of directors who make final approval of the compensation package.
A compensation committee is comprised of board of directors members within and outside the company.The committee performs three duties.First,they review various consultant recommendations for compensation packages.Second,they discuss the assets and liabilities of the recommendations.Third,they forward the best proposal to the board of directors for their consideration.
Companies that sell and exchange securities on public stock exchanges are required to file various information with the Securities and Exchange Commission (SEC).One of the main objectives of SEC is to clarify the presentation of CEO compensation along with four mostly highly paid executives.Another important objective of the SEC is to increase the accountability of company boards of directors for executive compensation policies and decisions.SEC requires companies to include the identity of consulting firms in public disclosure statements.This creates concerns for conflict of interest for consulting firms that consults a company on more than one area.Consulting companies might intentionally recommend better executive compensation packages to get additional consulting opportunities from the management.SEC rulings also increased board members' accountability for approving sound executive compensation packages
In 2011,the average CEO earned how much more annually than the average shampooer?
(43) VerifiedD
Under SEC rules,which of the following is true?
(42) VerifiedD
The actions of executives on behalf of their own self-interest are known as the ________ problem.
(40) An insurance company's board of directors decided to promise Katherine,one of their recently hired senior executives,to pay a bonus that is equal to the value of 10,000 company shares at the time she started to work.What type of compensation arrangement did the board of directors promise?
(30) As the vice-president,Sheila will receive short-term incentive compensation awards based on which two conditions?
(37) Under the Troubled Assets Relief Program (TARP),banks with financial assistance from the federal government can only deduct how much annually for an executive's pay as a business expense?
(33) ________ bonuses are awarded to executives by boards of directors on an elective basis.
(34) This type of executive bonus plan is similar to the appraisal system used to determine merit increases for non-executive employees.
(25) When he became CEO,Duane was given a stock option that does not require him to exercise his options in order to receive income.Which plan is it?
(29) Describe golden parachute and platinum parachute practices.How are they similar to each other? How are these different from each other?
(39) XYZ Co.took back performance-based compensation of $1.2 million from their CEO because of his decision of the buyout of another firm that eventually lowered the overall value of the XYZ Co.Which of the following compensation agreements allowed the board of directors to take back this $1.2 million?
(29) Which type of stock options does not give executives favorable tax treatment?
(37) ________ provide pay and benefits to executives after a termination that results from a change in ownership or merger.
(33) XYZ Pharmaceuticals recently announced that the clinical trials for a cancer drug failed to cure the illness.This announcement led to a dramatic decrease in the stock value of the company.The company hired a new CEO two years ago when the clinical trials for this drug had already initiated.Which one of the following is true about the compensation of the CEO of XYZ Pharmaceuticals?
(30) A provision of the ________ established the say-on-pay requirement.
(33) The ________ Act of 2002 brought a number of reforms to enhance corporate responsibility,enhance financial disclosures,and combat accounting fraud due to fraud in companies such as Enron and Tyco.
(38) In the end,Yolanda beat Tristen and Michel in a series of competitions among top-level managers to become CEO of National LemGlass.Which compensation theory did the company probably use?
(43) Restricted stock generally allows the executives ownership of the stock after how many years?
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