Q&A Hero

Q: The SEC requires compensation information about the CEO and how many of the highest paid executives? A) 10 B) 7 C) 4 D) 2

Q: Which legally required document reveals detailed information about the compensation of the CEO and named executive officers (NEOs)? A) company's annual report B) compensation and benefits scorecard C) definitive proxy statement (DEF 14(A)) D) say-on-pay summary statement

Q: Which organization has as one of its main goals to help prospective investors understand the financial matters of importance to companies? A) U.S. Department of Labor B) Public Company Accounting Oversight Board C) Securities and Exchange Commission D) Dodd-Frank Commission

Q: Who are the key players in setting executive compensation? Detail their different roles. How does the SEC affect their roles?

Q: The concept that individuals evaluate their accomplishments by comparing themselves to similar individuals is based on ________ theory.

Q: The actions of executives on behalf of their own self-interest are known as the ________ problem.

Q: Shareholders' interests are represented by a ________, who weigh the pros and cons of top executives' decisions.

Q: 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? A) tournament B) competition C) comparison D) agency

Q: Using this executive compensation theory, shareholders negotiate the compensation contracts with the executive in hopes of aligning the executive's interests with theirs. A) agency B) tournament C) social comparison D) strategic

Q: Describe golden parachute and platinum parachute practices. How are they similar to each other? How are these different from each other?

Q: ________ provide pay and benefits to executives after a termination that results from a change in ownership or merger.

Q: A ________ stock plan is an arrangement whereby executives receive a bonus that is equivalent to either the value of company shares or the increase in that value over time.

Q: Executives receive ________ as the difference between the stock price at the time of purchase and the lower stock price at the time an executive receives the stock option.

Q: Company stock shares are the main form of executives' ________ compensation.

Q: ________ bonuses are awarded to executives by boards of directors on an elective basis.

Q: The recently appointed CEO of XYZ Inc. uses a luxury summerhouse owned by the company for rest and relaxation with his family as well as a place to invite important clients before a lucrative business deal. XYZ Inc. also provides a membership to an exclusive country club to its CEO. These kinds of benefits offered to CEOs are known as which of the following? A) discretionary bonuses B) perquisites C) golden parachutes D) clawback provisions

Q: The 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? A) platinum parachutes B) clawback provisions C) phantom stock D) golden parachute

Q: After the recent merger of ABC and XYZ Airlines, the former CFO of XYZ Airlines, John, lost his employment in the newly merged airline. Which executive compensation agreement is customary in such circumstances? A) stock buyout plans B) clawback awards C) platinum parachutes D) golden parachutes

Q: As CEO, Duane was granted stock options that do not require him to exercise them to receive income. Which of the following plans is it? A) stock appreciation rights B) discount stock C) restricted stock D) golden parachute

Q: Which of the following are shares of company stock that are awarded to executives at the end of the mandatory stipulation period? A) deferred stock shares B) deferred stock units C) restricted stock options D) restricted stock units

Q: Which of the following is the difference between the stock price at the time of purchase and the lower stock price at the time an executive receives the stock option? A) disposition value B) discounted value C) fair market value D) capital gains

Q: Which of the following refers to the sale of stock by the stockholder? A) stock option B) stock grant C) disposition D) exercise of one's grant

Q: Which of the following is the term used when a company offers stock to its employees? A) stock allocation B) stock option C) stock grant D) stock disposition

Q: These rights provide employees with an opportunity to purchase stock shares at a designated price or whenever the stock price increases, usually, within a specified period of time. A) stock option B) stock grant C) disposition D) exercise of one's grant

Q: Which type of plans provide an executive with ownership stakes in the company through a variety of mechanisms, including stock option plans and stock purchase plans? A) equality plans B) equity plans C) golden parachutes D) profit sharing plans

Q: Which of the following are the two main components of current core compensation? A) base pay and bonuses B) base pay and legally required benefits C) bonuses and legally required benefits D) base pay and discretionary benefits

Q: Which government agency provides the criteria for defining executive status? A) Securities and Exchange Commission B) U.S. Department of Labor C) Internal Revenue Service D) Dodd-Frank Commission

Q: Which of the following represent formal criteria for defining executive status? A) board of directors and key employees B) key employees and highly paid employees C) CEO and highly compensated employees D) key employees and highly compensated employees

Q: The IRS considers Sylvia to be a highly compensated employee for Beautiful Pictures, Inc., which means that she met which one of the following criteria (assume that the previous year was 2015)? A) either a current annual salary of more than $170,000; and, in the previous year, a 5% owner or a 1% owner of the employer's business whose annual pay was greater than $150,000 B) either an annual salary of more than $170,000; or, in the previous year, a 5% owner or a 1% owner of the employer's business whose annual pay was greater than $150,000 C) an annual salary exceeding $50,000 D) an annual salary less than $170,000

Q: For which reason does the IRS use the term "key employees"? A) non-discrimination rules in retirement benefits B) non-discrimination rules in health insurance benefits C) top-heavy provisions in employer-sponsored qualified retirement plans D) top-heavy provisions in employer-sponsored health insurance plans

Q: Pertaining to CEO compensation, under classic economic theory, which of the following is true? A) The price is obtained through negotiations that are at arm's length. B) The CEO names her price. C) Compensation is based on a market survey and job evaluation. D) The board of directors set CEO compensation.

Q: Which of the following describes CEO compensation that is deemed ineffective? A) pay-for-status B) pay-for-nonperformance C) seniority-based pay D) person-focused pay

Q: In theory, the CEO hires the consultant to perform an objective analysis of the company's executive pay package and to make whatever recommendations the consultant feels are appropriate; however, in practice, which tends to be the case? A) Shareholders' interests are often placed secondary to the interests of the CEO. B) This relationship generally leads to a compensation package that is higher than expected. C) This relationship generally leads to a compensation package that is lower than expected. D) This relationship has the potential to promote a conflict of interest.

Q: Which strategy could help contain workers' compensation costs? A) implementing health promotion programs B) raising employees' share of health insurance costs C) eliminating probationary waiting periods D) requiring that employees purchase and appropriately use safety gear

Q: Managing staffing levels to avoid layoffs due to poor business conditions can help control which type of benefits cost? A) unemployment insurance B) health care continuation coverage C) Medicare Part A coverage D) Social Security disability coverage

Q: Which of the following type of program can help reduce workers' compensation claims? A) COBRA coverage B) wellness C) workplace safety D) employee assistance

Q: ________ protects the transfer, disclosure, and use of health care information.

Q: Under which law must former employees be given the choice to continue their coverage, as well as coverage for their spouses and dependents, for up to 18 months? A) Health Maintenance Act B) Patient Protection and Affordable Care Act C) Consolidated Omnibus Budget Reconciliation Act D) Employee Retirement Income Security Act

Q: What is the maximum amount that companies are permitted to charge COBRA beneficiaries? A) 102 percent of all employees' annual pay B) 102 percent of the employee's annual pay C) 102 percent of the cost of health insurance to the beneficiary under the employer's plan D) 102 percent of the federal poverty guidelines

Q: Explain the difference between insurance plans offered by insurance companies and self-funded insurance plans.

Q: ________ requires employers to offer affordable health insurance to employees.

Q: A health insurance plan would lose its grandfathered status if it were to change ________.

Q: PPACA distinguishes between health plans that existed prior to the March 23, 2010, enactment date and those that come into existence afterward. Individual and group health plans already in existence prior to enactment are referred to as ________ plans.

Q: Approximately ________ percent of Americans experience some form of mental illness at least once during their lifetime.

Q: Mia has Parkinson's disease but is on an insurance plan that saves her from having to make frequent visits to the pharmacy. She is probably on a ________ drug plan.

Q: ________ accounts allow employees to pay for specified health care costs not covered by an employer's insurance plan.

Q: ________ physicians determine when patients need the care of specialists and help to control costs by reducing the number of unnecessary visits to specialists.

Q: Starting January 1, 2004, eligible individuals are allowed to establish HSAs under which law? A) Health Maintenance Organization Act B) Mental Health Parity Act C) Medicare Prescription Drug, Improvement and Modernization Act D) HIPAA

Q: Jose invested $2,000 in pre-tax income into this healthcare plan but lost the $780 unspent balance remaining at the end of the year. What type of plan was it? A) health savings account B) flexible spending account C) health reimbursement arrangement D) fee-for service plan

Q: This type of account does not permit employees to carry over any remaining balance from year to year. A) health reimbursement account B) health savings account C) flexible spending account D) flexible savings account

Q: Consumer driven health care strives to achieve which of the following objective? A) provide employees with a list of acceptable primary care physicians B) provide employees with greater choices while also containing costs C) increase the cost of health insurance D) maintain low copayments and coinsurance amounts

Q: Which of the following refers to payments an individual makes as a condition of receiving medical services? A) coinsurance B) premium C) deductible D) copayments

Q: Why do health reimbursement accounts (HRAs) appeal to employees with low salaries or hourly wages? A) The contribution of employees is on a pretax basis. B) Employees have the option not to contribute to an HRA. C) Employees forfeit unused balances at the end of a year. D) HRAs permit employees to carry unused balances from year to year.

Q: In which plan do employees possess the option to receive care from health care providers outside the designated network of physicians, paying more for the choice? A) fee-for-service plans B) preferred provider organizations C) HMOs D) point-of-service plans

Q: How often will Jill receive an unemployment check? A) daily B) weekly C) bi-monthly D) monthly

Q: What is another name for health maintenance organizations (HMOs)? A) outpatient medical services B) prepaid medical services C) inpatient medical services D) on-call medical services

Q: Which approach to providing health care makes the most sense when a company's financial burden of covering employee medical expenses is less than the cost to subscribe to an insurance company for coverage? A) managed care B) consumer-driven health care C) commercial insurance D) self-funding

Q: What is coinsurance? A) Both parents have employer-sponsored insurance coverage for their children. B) Two insurance companies combine to offer group insurance coverage. C) An employee pays all out-of-pocket expenses before the insurance takes effect. D) The insured pays a percentage of covered expenses.

Q: Briefly discuss the components of legally required benefits. How can HR managers minimize the costs that are associated with legally required benefits?

Q: Compare Social Security disability benefits with the workers' compensation disability benefits.

Q: Describe five ways that an employer-sponsored health plan could lose its grandfathered status.

Q: Both employers and employees finance Medicare Part A benefits through payroll taxes of ________ percent on all earnings.

Q: The ________ is the minimum period of time an individual must be employed before becoming eligible to receive unemployment insurance under the Social Security Act of 1935.

Q: Under the Family and Medical Leave Act, how many hours would Pierre have had to work in the previous 12 months in order for him to take time off to care for his wife and new child? A) 1,000 B) 1,250 C) 1,600 D) 800

Q: To be eligible for unemployment insurance benefits, an individual must meet which of the following requirements? A) has been employed for at least 5 years B) has not voluntarily changed employers within a 3-year period C) has not been terminated because of gross violations of workplace conduct D) has been eligible to receive Medicare benefits for at least 10 years

Q: PPACA has mandated that the "donut hole," which is the gap in Medicare Part D prescription drug coverage, must decrease each year until it reaches no more than which of the following? A) 10 percent of the prescription drug medication cost B) 15 percent of the prescription drug medication cost C) 20 percent of the prescription drug medication cost D) 25 percent of the prescription drug medication cost

Q: Compared to the FICA rate, the SECA tax rate is which of the following amounts? A) half as much B) equal C) three times as much D) twice as much

Q: Which of the following is covered by Medicare Part A? A) inpatient hospital care B) IV drugs C) ambulance D) outpatient care

Q: How is Medicare Part A financed? A) payroll taxes paid only by employers B) out-of-pocket C) payroll taxes paid by both employers and employees D) congressional fiat

Q: To receive OASDI disability benefits, Sung Lee's disability would have to be expected to last at least how long? A) 6 months B) 12 months C) 3 months D) 18 months

Q: In 2022, how old will Cary have to be to receive full Social Security benefits? A) 57 B) 62 C) 65 D) 67

Q: Samuel's full retirement age is 65 years old; and his monthly benefit at that age is $1,000. According to the Social Security Administration retirement program, what will Samuel's monthly benefit be if he decides to take retirement as early as age 63? A) equal to $1,000 B) greater than $1,000 C) less than $1,000 but greater than $0 D) $0

Q: To be fully insured under the OASDI retirement benefit, an employee would have to work at least how long? A) 24 months B) 5 years C) 10 years D) 30 years

Q: The first 4 quarters of the last 5 completed calendar quarters in the previous year is the base period for which benefit? A) OASDI B) Medicare Part A C) unemployment insurance D) workers' compensation

Q: During the early 20thcentury, high incidences of industrial accidents and occupational illnesses prompted which of the following benefits? A) Social Security disability insurance B) Social Security unemployment insurance C) Social Security survivor insurance D) workers' compensation

Q: Which of the following is the fundamental purpose of legally required benefits? A) Social Security benefits B) paid time off C) social insurance D) tax revenue source for the government

Q: Ensuring the financial solvency of individuals during periods of temporary unemployment and following work-related injuries helps to do which of the following? A) promote tax revenue B) promote the well-being of the economy C) provide competitive advantage to some employers, but not to others D) enhance organizational commitment

Q: When employees take advantage of ________ benefits, they are more likely to contribute to the strategic imperatives of product or service differentiation or cost reduction.

Q: Which of the following could undermine competitive advantage? A) basing employee benefits awards based on performance B) offering flexible benefits plans C) offering employee benefits as an entitlement D) offering employee benefits following the completion of a lengthy probationary period

Q: The tax advantage afforded companies from offering particular discretionary benefits has strategic value for which of the following reasons? A) It translates into cost savings to companies. B) It may adversely undercut company profits. C) It helps companies retain talented employees. D) It may lead to a decrease in the number of benefits a company chooses to offer.