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# Although recent censure of corporate boards

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Senior Manager
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16 Jun 2015, 10:07
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Question 2
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Although recent censure of corporate boards of directors as “passive” and “supine” may be excessive, those who criticize board performance have plenty of substantive ammunition. Too many corporate boards fail in their two crucial responsibilities of overseeing long-term company strategy and of selecting, evaluating, and determining appropriate compensation of top management. At times, despite disappointing corporate performance, compensation of chief executive officers reaches indefensibly high levels, nevertheless, suggestions that the government should legislate board reform are premature. There are ample opportunities for boards themselves to improve corporate performance.

Most corporate boards’ compensation 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 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 long-term performance. By tacitly detaching executive compensation policy from long-term performance, committees harm their companies and the economy as a whole. The committees must develop incentive compensation policies to emphasize long-term performance. For example a board’s compensation committee can, by carefully proportioning straight salary and such short-term and long-term incentives as stock options, encourage top management to pursue a responsible strategy.

According to the passage, the majority of compensation committees put the greatest 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 comparable corporations
D.The probable effect the determination will have on competitors
E.The probable effect the economic climate will have on the company

The passage suggests which of the following 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 companies.
C.The performance of individual companies would be affected by such legislation to a greater extent than would the economy as a whole.
D.Such legislation would duplicate initiatives already being made by corporate boards to improve their own performance.
E.Corporate boards themselves could act to make such legislation unnecessary.

Which of the following best describes the organization of the passage?
A. problem is acknowledged, the causes are explored, and a solution is offered.
B. question is raised, opposing points of view are evaluated, and several alternative answers are discussed.
C. means of dealing with a problem is proposed, and the manner in which a solution was reached is explained.
D. plan of action is advanced, and the probable outcomes of that plan are discussed.
E.Two competing theories are described and then reconciled.

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Although recent censure of corporate boards  [#permalink]

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10 Oct 2015, 02:32
1
According to the passage, the majority of compensation committees put the greatest 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 comparable corporations --> Direct Question : Answer can be found at "They are content if the pay of top executives approximates that of the executives of competing firms with comparable short-term earnings or even that of executives of competing firms of comparable size."
D.The probable effect the determination will have on competitors
E.The probable effect the economic climate will have on the company

The passage suggests which of the following 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 companies.
C.The performance of individual companies would be affected by such legislation to a greater extent than would the economy as a whole.
D.Such legislation would duplicate initiatives already being made by corporate boards to improve their own performance.
E.Corporate boards themselves could act to make such legislation unnecessary. --> nevertheless, suggestions that the government should legislate board reform are premature. There are ample opportunities for boards themselves to improve corporate performance.

Which of the following best describes the organization of the passage?
A. problem is acknowledged, the causes are explored, and a solution is offered. -- Correct Answer. Problem : corporate boards of directors donot concentrate on the Long term performance, Causes: Focus on Salary of competitors, Solution : The committees must develop incentive compensation policies to emphasize long-term performance.
B. question is raised, opposing points of view are evaluated, and several alternative answers are discussed.
C. means of dealing with a problem is proposed, and the manner in which a solution was reached is explained.
D. plan of action is advanced, and the probable outcomes of that plan are discussed.
E.Two competing theories are described and then reconciled.

----------------
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Re: Although recent censure of corporate boards  [#permalink]

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03 Feb 2016, 22:10
1. According to the passage, the majority of compensation committees put the greatest emphasis on which of the following when determining compensation for their executives?
C.Salaries paid to executives of comparable corporations
"Most corporate boards’ compensation committees focus primarily on peer-group comparisons." Two sentences have the same meaning, just changing words.

2. The passage suggests which of the following about government legislation requiring that corporate boards undergo reform?
E.Corporate boards themselves could act to make such legislation unnecessary.
"The government should legislate board reform are premature. There are ample opportunities for boards themselves to improve corporate performance."

3. Which of the following best describes the organization of the passage?
A. problem is acknowledged, the causes are explored, and a solution is offered.
B. question is raised, opposing points of view are evaluated, and several alternative answers are discussed.

3 other choices are quite easy to eliminate.
The first passage: an issue was noted and a solution was called in to question.
The second passage illustrated the reasons of the problem, and some ways to improve the situation.
Choice A is correct.
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05 Aug 2016, 00:22
One of the easier passages . Took 2 mins to read and 4 mins 30 seconds in total

-The author acknowledges the problem of corporate boards
- The author then talks about the potential reasons about why the corporate boards are failing
- The author then offers a solution around boards themselves improving their performance

1. “Most corporate boards’ compensation 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 that of executives of competing firms of comparable size"
Option (C ) is a clear word justification of the above and is hence correct.

2. “There are ample opportunities for boards themselves to improve corporate performance."

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Re: Although recent censure of corporate boards  [#permalink]

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27 Sep 2016, 08:13
Kindly Tag this RC as Exam Pack 1
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Re: Although recent censure of corporate boards  [#permalink]

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20 Jan 2017, 15:28
Hi,

Can someone pls explain, what is the issue in Option C of 3rd question - "means of dealing with a problem is proposed, and the manner in which a solution was reached is explained."

In other words, I need help to choose between A and C. Both seem pretty close to me.

Thanks,
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30 Jan 2017, 03:56
ankur2710 wrote:
Hi,

Can someone pls explain, what is the issue in Option C of 3rd question - "means of dealing with a problem is proposed, and the manner in which a solution was reached is explained."

In other words, I need help to choose between A and C. Both seem pretty close to me.

Thanks,
Ankur

"..the manner in which a solution was reached is explained" - incorrect:
The passage does not mention any particular case in which a solution was reached in some particular manner. The passage OFFERS proposal to deal with the problem but does not state whether that proposal was implemented in some case to solve the problem.

(Moreover the beginning of the passage does not mention means of dealing with the problem. Only at the end of the passage some means to deal with the problem is proposed. Option C wrongly implies that first a means is proposed, and then it is explained how a solution is reached.)
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Re: Although recent censure of corporate boards  [#permalink]

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22 Apr 2017, 13:01
Hi,

I knew the ans of the second question was hidden into the line 'At times, despite disappointing corporate performance, compensation of chief executive officers reaches indefensibly high levels, nevertheless, suggestions that the government should legislate board reform are premature. There are ample opportunities for boards themselves to improve corporate performance.'

But I did not understand how option E. Corporate boards themselves could act to make such legislation unnecessary. is connected to the bold phase above. Can anyone help? It seems very easy question, But I am not able to get it.
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Re: Although recent censure of corporate boards  [#permalink]

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19 Jun 2017, 07:21
arunavamunshi1988 wrote:
Hi,

I knew the ans of the second question was hidden into the line 'At times, despite disappointing corporate performance, compensation of chief executive officers reaches indefensibly high levels, nevertheless, suggestions that the government should legislate board reform are premature. There are ample opportunities for boards themselves to improve corporate performance.'

But I did not understand how option E. Corporate boards themselves could act to make such legislation unnecessary. is connected to the bold phase above. Can anyone help? It seems very easy question, But I am not able to get it.

Hi,

The following is my approach on Question no.2. Hope that it would help.

The passage suggests which of the following about government legislation requiring that corporate boards undergo reform?

"At times, despite disappointing corporate performance, compensation of chief executive officers reaches indefensibly high levels, nevertheless, suggestions that the government should legislate board reform are premature. There are ample opportunities for boards themselves to improve corporate performance."

A.Such legislation is likely to discourage candidates from joining corporate boards.
B.Such legislation is likely to lead to reduced competition among companies.
C.The performance of individual companies would be affected by such legislation to a greater extent than would the economy as a whole.

---> A, B and C are incorrect, because there is no information about effect(s) of government legislation on board's candidates, competition among companies, and performance of individual companies discussed in the passage.

D.Such legislation would duplicate initiatives already being made by corporate boards to improve their own performance.
---> Be careful! This is a very tempting option, if you rely on only the bold face you mentioned above "suggestions that the government should legislate board reform are premature". But the point may lie on the last sentence of the 1st paragraph that explains why government legislation is not preferred - "There are ample opportunities for boards themselves to improve corporate performance."
. Therefore, option (D) is out!

E.Corporate boards themselves could act to make such legislation unnecessary.
----> Correct! This is exactly the reason why we don't need government legislation, as mentioned at end of the 1st paragraph.
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Re: Although recent censure of corporate boards  [#permalink]

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04 Jul 2017, 08:39
Lucy Phuong wrote:
arunavamunshi1988 wrote:
Hi,

I knew the ans of the second question was hidden into the line 'At times, despite disappointing corporate performance, compensation of chief executive officers reaches indefensibly high levels, nevertheless, suggestions that the government should legislate board reform are premature. There are ample opportunities for boards themselves to improve corporate performance.'

But I did not understand how option E. Corporate boards themselves could act to make such legislation unnecessary. is connected to the bold phase above. Can anyone help? It seems very easy question, But I am not able to get it.

Hi,

The following is my approach on Question no.2. Hope that it would help.

The passage suggests which of the following about government legislation requiring that corporate boards undergo reform?

"At times, despite disappointing corporate performance, compensation of chief executive officers reaches indefensibly high levels, nevertheless, suggestions that the government should legislate board reform are premature. There are ample opportunities for boards themselves to improve corporate performance."

A.Such legislation is likely to discourage candidates from joining corporate boards.
B.Such legislation is likely to lead to reduced competition among companies.
C.The performance of individual companies would be affected by such legislation to a greater extent than would the economy as a whole.

---> A, B and C are incorrect, because there is no information about effect(s) of government legislation on board's candidates, competition among companies, and performance of individual companies discussed in the passage.

D.Such legislation would duplicate initiatives already being made by corporate boards to improve their own performance.
---> Be careful! This is a very tempting option, if you rely on only the bold face you mentioned above "suggestions that the government should legislate board reform are premature". But the point may lie on the last sentence of the 1st paragraph that explains why government legislation is not preferred - "There are ample opportunities for boards themselves to improve corporate performance."
. Therefore, option (D) is out!

E.Corporate boards themselves could act to make such legislation unnecessary.
----> Correct! This is exactly the reason why we don't need government legislation, as mentioned at end of the 1st paragraph.

According to my point of view, your approach towards this question is correct.
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Re: Although recent censure of corporate boards  [#permalink]

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05 Jul 2017, 01:31
Thank you, anairamitch1804
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12 Nov 2017, 03:58
Time taken - 6 mins.

3/3
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Re: Although recent censure of corporate boards  [#permalink]

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10 Jan 2018, 15:28
C, E A -- Under 5 minutes

here for help guys
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Re: Although recent censure of corporate boards  [#permalink]

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09 Feb 2019, 20:41
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