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02 Oct 2018, 09:59
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C
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
35%
(medium)
Question Stats:
78% (01:45) correct
22%
(02:20)
wrong
based on 68
sessions
History
Date
Time
Result
Not Attempted Yet
There is little correlation between CEO compensation and the company's performance. If there were a considerable correlation, the companies that paid their CEOs the most would have highest growth in profits, revenue, and stock price. Most of companies that have performed best in terms of profit, revenue, and stock price growth over the last 2 decades have been the ones whose CEOs are their founders.
If the statements above are true, which of the following must be true?
A. None of the top performing companies over the past 2 decades have been led by CEO’s who are not founders of the company.
B. A company that pays its CEO a very high compensation is likely to perform worse than a company that does not compensate its CEO as well.
C. Founders of most of the companies that show highest growth in profit, revenue, and stock price are not amongst the highest paid CEOs in the industry.
D. CEOs who are also Founders of the company do not get paid as much as CEOs who are not.
E. If a company is not led by a founder, it will not be a top performing company in the future.
If the statements above are true, which of the following must be true?
A. None of the top performing companies over the past 2 decades have been led by CEO’s who are not founders of the company.
B. A company that pays its CEO a very high compensation is likely to perform worse than a company that does not compensate its CEO as well.
C. Founders of most of the companies that show highest growth in profit, revenue, and stock price are not amongst the highest paid CEOs in the industry.
D. CEOs who are also Founders of the company do not get paid as much as CEOs who are not.
E. If a company is not led by a founder, it will not be a top performing company in the future.
Archived Topic
Hi there,
This topic has been closed and archived due to inactivity or violation of community quality standards. No more replies are possible here.
Where to now? Join ongoing discussions on thousands of quality questions in our Critical Reasoning (CR) Forum
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03 Oct 2018, 01:30
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zac123
Let's break down the logic of the passage:
Claim: There is little correlation between CEO compensation and company performance (profits, revenues prices)
Evidence: Most companies that have performed best have founder CEOs.
As our statements are both statistical ('little correlation', 'most companies') and compare clearly separate categories (founder vs. non-founder, high profit vs. low profit) most likely our correct answer will have to do with the logic connecting these concepts, namely that of weighted average. Which is why we'll go for a Logical approach of inferring the answer based on what we know about weighted averages (and overlapping sets).
In particular, as the 'average CEO' of a high-profit company is a 'founder', then it can't also be that the average salary of a 'founder' is very high because that would imply a direct correlation between 'high-performing companies' (via 'founder CEOs') to 'high salary', in contradiction to the claim.
Looking through our answers, this is exactly what (C) tells us.
(C) is our answer.
Archived Topic
Hi there,
This topic has been closed and archived due to inactivity or violation of community quality standards. No more replies are possible here.
Where to now? Join ongoing discussions on thousands of quality questions in our Critical Reasoning (CR) Forum
Still interested in this question? Check out the "Best Topics" block above for a better discussion on this exact question, as well as several more related questions.
Thank you for understanding, and happy exploring!
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