Paulo Owns a Few Shares of Stock in a Large

question 85

Multiple Choice

Paulo owns a few shares of stock in a large and diversified firm.He realizes that the CEO of the company is responsible for a multi-billion dollar business,but is upset with what he feels is excessive compensation for the chief executive officer,particularly since the firm has reported losses for the past two years.Paulo's concerns are:

• A)unfounded,since laws in Canada prevent firms from paying large salaries or bonuses to executives when a firm reports a loss.
• B)likely to be well-founded since CEO compensation at many Canadian companies has actually increased even when the company performed poorly.
• C)based on an erroneous conclusion,because CEO pay is always based on a formula tied to the company's profits and losses.
• D)not entirely unfounded,but he needs to realize that the pay received by most chief executives must be reinvested in the company if it's unprofitable for three years in a row.

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Definitions:

Iliacus

A muscle located in the pelvis, part of the iliopsoas group, important for flexing the hip and stabilizing the lower body.

Sartorius

The sartorius is a long, thin, superficial muscle that runs down the length of the thigh in the human body, known for being the longest muscle.

Thorax Muscle

Refers to the muscles located in the chest region that assist with the breathing process and support upper body movements.

Intercostal

Pertaining to the muscles and nerves situated between the ribs, involved in the mechanics of breathing.