In most corporations the salaries of executives are set by a group fro

Question

Competition Mode Question

In most corporations the salaries of executives are set by a group from the corporation’s board of directors. Since the board’s primary mission is to safeguard the economic health of the corporation rather than to make its executives rich, this way of setting executives salaries is expected to prevent excessively large salaries. But, clearly, this expectation is based on poor reasoning. After all, most members of a corporation’s board are themselves executives of some corporation and can expect to benefit from setting generous benchmarks for executives salaries.

The point made by the author is that the most common way of setting executives salaries might not keep those salaries in bounds because

(A) most corporals executives, thanks to their generous salaries, are not financially dependent on money earned as board members

(B) most corporals executives might be less generous in setting their own salaries than the board members actually setting them are

(C) many board members might let their self-interest as executives interfere with properly discharging their role as board members in setting executives salaries

(D) many board members who set executives salaries unreasonably high do so because they happen to be on the board of a corporation of which they expect later to become executives

(E) many board members are remunerated generously and wish to protect this source of income by pleasing the executives to whom they owe their appointments on the board

YashKothari94 · Answer

Close call between C & D. I pick C

I think this is similar to a MUST BE TRUE question. Hence, we are not allowed to bring in outside information.

After all, most members of a corporation’s board are themselves executives of  some  corporation and can expect to benefit from setting generous benchmarks for executives salaries. Note that the argument does not tell us that they are executives of the same corporation (which would ofc be illogical). This was a turning point for me to pick C over D.

(A) most corporals executives, thanks to their generous salaries, are not financially dependent on money earned as board members  Does not tell us why the reasoning may be flawed

(B) most corporals executives might be less generous in setting their own salaries than the board members actually setting them are  Irrelevant imo

(C) many board members might let their self-interest as executives interfere with properly discharging their role as board members in setting executives salaries  orrect. The argument suggests that since board members themselves are executives of some corporation, this fact hinders their decision making as board-members, who are generally tasked with protecting the economic health of their corp. In a nutshell, this trend of not handing out high salaries to executives affects the board members too since they are also executives of some corp.

(D) many board members who set executives salaries unreasonably high do so because they happen to be on the board of a corporation of which they expect later to become executives  Argument does not tell us anything about board members intention of joining the same company of which they are board members

(E) many board members are remunerated generously and wish to protect this source of income by pleasing the executives to whom they owe their appointments on the board  New information.OUT

exc4libur · Answer

ARGUMENT
  board sets wages for execs with the intent to prevent high wages;
  board, which is not part company, will set wages appropriately;
  however, the board also stands to benefit from setting wages, thus poor reasoning.

SALARIES WON'T BE IN CHECK BECAUSE…
 Ans (C) board members self-interest will interfere with properly discharging their roles.

VerbalBot · Answer

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In most corporations the salaries of executives are set by a group fro

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