This Is Anne's Year! She Finally Broke Through the Glass

question 272

Multiple Choice

This is Anne's year! She finally broke through the glass ceiling - meaning she has reached an executive level position with her company, with a salary upwards of $200,000. Recently a competitor firm has approached her offering her $15,000 less in salary, but the job would come with an upgraded car, memberships in two country clubs of her choice, an additional two weeks paid vacation with use of the company's villa in Jamaica, and paid financial counseling. With respect to compensation, Anne:

• A)provide sales representatives with a strong incentive to generate more sales for the company.
• B)keep the pay system as simple as possible.
• C)be able to deduct the cost of compensating the sales representatives from its taxable income.
• D)give the sales representatives a stronger incentive to collaborate with each other and act as a team.

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Definitions:

Performance Hurdle

A benchmark or specific target set that must be achieved before certain rewards, such as bonuses or stock options, are granted.

Repriced Option

An option whose terms, specifically the strike price, have been adjusted, typically to make the options more favorable for the holder following declines in the market price of the underlying asset.