Which of the Following Statements Concerning Having a CEO Serve

question 65

Multiple Choice

Which of the following statements concerning having a CEO serve as chairman of the board is most accurate? Having a CEO also serve as chairman is considered:

• A) poor corporate governance practice as having the CEO server as chairman is an inherent conflict when determining management compensation.
• B) good corporate governance practice as the CEO is the best person to provide the board with information about the company's strategy and operations.
• C) cannot be determined
• D) poor corporate governance practice as having the CEO and chairman serve as separate positions ensures a properly-functioning board.

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Definitions:

Residual Income

The amount of income that an individual or business has after all personal debts and expenses, including the cost capital, have been paid.

Financial Performance

An indicator of how well an entity can use assets from its primary mode of business and generate revenues.

Residual Income

A measure of performance that calculates the income an investment generates above the minimum required return.

Net Operating Income

A measure of a company's profitability, calculated by subtracting operating expenses from operating income.