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Chief Executive Officer: We should distribute hefty bonuses to our

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Chief Executive Officer: We should distribute hefty bonuses to our  [#permalink]

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New post Updated on: 13 Feb 2019, 01:10
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  15% (low)

Question Stats:

84% (01:41) correct 16% (02:01) wrong based on 105 sessions

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Chief Executive Officer: We should distribute hefty bonuses to our division managers to express our appreciation for their stellar performance this year. The bonuses would prevent their departure to our competitors who are offering them higher salaries.

Chief Financial Officer: I respectfully disagree. Although we should attempt to retain our division managers because they have triggered a twofold increase in revenues, bonuses might trigger retirements.

Which of the following, if true, would most strengthen the Chief Financial Officer's objection?


A) Compensation policies can have unintended consequences.

B) Last year's twenty-five percent increase in salaries did not cause any accelerated retirements.

C) While bonuses would lead some division managers to reject competitors' employment offers, they would lead to even more retirements.

D) In the past five years, several division managers have left the company because of work-related injuries.

E) A recent company survey found that bonuses increase morale among division managers more so than among high level executives.

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Originally posted by LordStark on 13 Feb 2019, 01:05.
Last edited by Bunuel on 13 Feb 2019, 01:10, edited 1 time in total.
Edited the question.
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Concentration: Strategy, Marketing
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GMAT 1: 670 Q50 V31
GMAT 2: 720 Q50 V37
WE: Marketing (Telecommunications)
Re: Chief Executive Officer: We should distribute hefty bonuses to our  [#permalink]

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New post 19 Feb 2019, 02:48
PeepalTree wrote:
Chief Executive Officer: We should distribute hefty bonuses to our division managers to express our appreciation for their stellar performance this year. The bonuses would prevent their departure to our competitors who are offering them higher salaries.

Chief Financial Officer: I respectfully disagree. Although we should attempt to retain our division managers because they have triggered a twofold increase in revenues, bonuses might trigger retirements.

Which of the following, if true, would most strengthen the Chief Financial Officer's objection?


A) Compensation policies can have unintended consequences.

B) Last year's twenty-five percent increase in salaries did not cause any accelerated retirements.

C) While bonuses would lead some division managers to reject competitors' employment offers, they would lead to even more retirements.

D) In the past five years, several division managers have left the company because of work-related injuries.

E) A recent company survey found that bonuses increase morale among division managers more so than among high level executives.


We need to look for an option that further strengthens the CFOs comment that more people will take retirement in case bonuses are offerd.

A) Compensation policies can have unintended consequences.
Too broad. Incorrect.

B) Last year's twenty-five percent increase in salaries did not cause any accelerated retirements.
We are focussing on how bonuses can impact retirements. Not the salary increases. Not relevant.

C) While bonuses would lead some division managers to reject competitors' employment offers, they would lead to even more retirements.
This is the only option that focuses on bonuses and confirms the CFOs objection that more bonuses will lead to more retirements, even though it may also help in rejecting competitors employment offers. Correct.

D) In the past five years, several division managers have left the company because of work-related injuries.
Not relevant.

E) A recent company survey found that bonuses increase morale among division managers more so than among high level executives.
Not relevant. Talks about how bonuses impact morale and not retirements.

Hence C is the correct answer.
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Re: Chief Executive Officer: We should distribute hefty bonuses to our   [#permalink] 19 Feb 2019, 02:48
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