Test Your Knowledge

Principles of Executive Rewards (Course C6)

Instructions: Choose an answer for each question and then click on the "Get Results" button at the end of the quiz.

1. Which statement is most accurate regarding the number of executives in large companies?
A. The number of executives may be less than 1% of total employees.
B. The number of executives often is greater than 10% of total employees.
C. Large companies must have one executive for every 100 employees.
D. The number of executives typically is greater than the number of managers and supervisors.

2. Which of the following is among the key objectives of an executive rewards program?
A. To make all employees key stakeholders in the company
B. To avoid corporate taxes
C. To be internally equitable and externally competitive
D. To prevent a hostile takeover from leading competitors

3. Which of the following best describes the alternative minimum tax?
A. Tax paid by the employer on all taxable profits
B. Tax liability on taxpayers who may not have been required to pay taxes under the regular tax system
C. The tax on gains realized from the sale of shares of stock
D. An individual's tax on earnings from wages, tips and all other sources

4. Which financial statement lists the company's assets and liabilities, as well as its net worth, at a particular moment in time?
A. Income statement
B. Balance sheet
C. Statement of cash flows
D. Statement of changes in shareholders' equity

5. Which of the following is used to calculate earnings per share (EPS)?
A. Book value
B. Shares authorized
C. Shares outstanding
D. Stockholders' equity

6. When benchmarking total rewards data for executives, what is a major factor in establishing salary and short-term incentives?
A. The geographic location of the surveyed organizations
B. The number of incumbents within the organization
C. The length of service of each executive
D. The magnitude of accountability in the executive job

7. What is considered the main goal of a short-term incentive plan?
A. Ease the organization's budget constraints
B. Motivate performance
C. Align executive and shareholder interests
D. Create executive ownership

8. What best describes a reason to use equity as a long-term incentive?
A. Executives value equity more than cash.
B. Shareholders appreciate the effect that equity-based compensation has on dilution.
C. Cash flow may increase depending on the incentive used

9. Which of the following provides a snapshot of the relative use of stock options within the greater scope of shares outstanding?
A. Dilution
B. Overhang
C. Run rate

10. Which statement is most accurate regarding supplemental executive benefits?
A. They typically comprise a small percentage of an executive's total rewards package.
B. Due to limitations, organizations offer a limited number of supplemental executive benefits to recruit talent.
C. They are typically found in growth and threshold companies, but not mature companies.
D. Any benefits received by executives are exempt from federal tax.

The Test Your Knowledge questions are intended to provide a small sample of the information covered in a particular course. Passing this test should not be considered an indicator that you also will pass the related certification exam. No portion of this document may be reproduced in any form without express written permission from WorldatWork. Copyright 2005 WorldatWork.

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