Most corporate boards compensation 20 committees

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Most corporate boards’ compensation (20) committees focus primarily on peer-group comparisons. They are content if the pay of top executives approximates that of the executives of competing firms with comparable short-term earnings or even (25) that of executives of competing firms of comparable size. However, mimicking the compensation policy of competitors for the sake of parity means neglecting the value of compensation as a means of stressing
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(30) long-term performance. By tacitly detach- ing executive compensation policy from long-term performance, committees harm their companies and the economy as a whole. The committees must develop (35) incentive compensation policies to empha- size long-term performance. For example a board’s compensation committee can, by carefully proportioning straight salary and such short-term and long-term incentives (40) as stock options, encourage top manage- ment to pursue a responsible strategy. ------------------------------------------------------------------------------------------------------- Q14 According to the passage, the majority of compensation committees put the great- est emphasis on which of the following when determining compensation for their executives? A. Long-term corporate performance B. The threat of government regulation C. Salaries paid to executives of com- parable corporations D. The probable effect the determination will have on competitors E. The probable effect the economic climate will have on the company answer: ------------------------------------------------------------------------------------------------------- Q15 The passage suggests which of the follow- ing about government legislation requiring that corporate boards undergo reform? A. Such legislation is likely to discourage candidates from joining corporate boards. B. Such legislation is likely to lead to reduced competition among com- panies. C. The performance of individual com- panies would be affected by such legislation to a greater extent than would the economy as a whole. D Such legislation would duplicate
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initiatives already being made by corporate boards to improve their own performance. E Corporate boards themselves could act to make such legislation unnec- essary. Answer: ------------------------------------------------------------------------------------------------------- Q16 Which of the following best describes the organization of the passage? A. A problem is acknowledged, the causes are explored, and a solu- tion is offered. B. A question is raised, opposing points of view are evaluated, and several alternative answers are discussed. C. A means of dealing with a problem is proposed, and the manner in which a solution was reached is explained. D. A plan of action is advanced, and the probable outcomes of that plan are discussed. E. Two competing theories are described and then reconciled. Answer: ------------------------------------------------------------------------------------------------------- Q17 Responding to the public’s fascination with-and sometimes undue alarm over-possible threats from asteroids, a scale developed by astronomers rates the likelihood that a particular asteroid or comet may collide with Earth.
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