company stock at today’s price at some time in the future?
A) at-risk variable plan
B) multiplier method
C) stock option
D) gainsharing plan
41) With which of the following can an executive NOT profit until the stock makes significant
gains?
A) indexed options
B) phantom stock
C) restricted stock
D) premium priced options
42) With a ________, an executive receives units instead of shares of company stock. In the
future, the executive receives cash equal to the appreciation of the units owned.
A) nonqualified stock option
B) premium priced option
C) phantom stock plan
D) restricted stock plan
43) Which term refers to payments companies make in connection with a change in ownership or
control of a company?
A) pension
B) golden parachute
C) retirement bonus
D) stock option
44) All of the following are advantages of team incentive plans EXCEPT that ________.
A) jealousy is reduced
B) wage equity is guaranteed
C) team planning is reinforced
D) problem solving is encouraged
45) The employees at DataMax participate in a profit-sharing plan. DataMax distributes 15% of
its profits as profit shares to employees at regular intervals. Which of the following is most likely
used at DataMax?
A) current profit-sharing
B) Lincoln incentive system
C) deferred profit-sharing plan
D) employee stock ownership plan
46) Tanner’s employer puts a predetermined portion of profits into a trust account for Tanner’s
retirement. Which of the following is most likely the type of profit-sharing plan used by Tanner’s
employer?
A) deferred profit-sharing plan
B) Lincoln incentive system
C) Jefferson incentive system
D) gainsharing plan
47) Which profit-sharing plan provides tax advantages for employees by postponing income
taxes, often until the employee retires?
A) cash plan
B) Lincoln incentive system
C) deferred profit-sharing plan
D) employee stock ownership plan
48) The Scanlon plan includes all of the following features EXCEPT ________.
A) identity
B) competence
C) a philosophy of cooperation
D) a focus on individual achievement
49) Which incentive plan is based on a philosophy that managers and employees must cooperate
together?
A) cash plan
B) Scanlon plan
C) deferred profit-sharing plan
D) employee stock ownership plan
50) Which of the following best explains identity in regards to the Scanlon plan?
A) philosophy of cooperation among employees
B) clear articulation of the company mission
C) high level of competence from all employees
D) corporate-wide benefits and savings
51) Competence in the Scanlon plan refers to a focus on ________.
A) cooperation
B) corporate vision
C) employee abilities
D) significant improvements
52) The Scanlon plan is an early version of a ________ plan, an incentive plan that engages
employees in a common effort to achieve productivity objectives.
A) performance achievement
B) golden parachute
C) gainsharing
D) variable pay
53) Gainsharing is an incentive plan that ________.
A) uses a trust to hold stock in individual employee accounts and distributes it to employees
upon retirement
B) engages employees in a common effort to achieve a company’s productivity objectives with
any resulting cost-savings gains shared among employees and the company
C) contributes company shares of its own stock or cash to be used to purchase company stock to
a trust established to purchase shares of the firm’s stock for employees
D) provides tax advantages for employees by deferring income taxes, often until the employee
retires
54) Which of the following is NOT a type of gainsharing plan?
A) Improshare
B) Lincoln
C) Rucker
D) Roth
55) Tyler Oil offers a profit-sharing plan to its employees. Each year, Tyler Oil distributes total
annual profits less taxes among employees based on employee merit ratings. Which of the
following is most likely used by Tyler Oil?
A) cash plan
B) Lincoln incentive system
C) deferred profit-sharing plan
D) employee stock ownership plan
56) The Lincoln incentive system is an incentive plan that ________.
A) uses a trust to hold stock in individual employee accounts and distributes it to employees
upon retirement
B) engages many or all employees in a common effort to achieve a company’s productivity
objectives with any resulting cost-savings gains shared among employees and the company
C) contributes company shares of its own stock or cash to be used to purchase company stock to
a trust established to purchase shares of the firm’s stock for employees
D) involves the firm distributing total annual profits each year among employees based on their
merit rating
57) When hired by Delmar Designs, Shane agreed to forego 6% of his normal pay if he didn’t
meet his goals in return for a 12% bonus if he exceeded his goals. In which type of plan does
Shane most likely participate?
A) earnings-at-risk pay plan
B) variable risk sharing plan
C) at-risk gainsharing plan
D) employee at-risk plan
58) Elaine, the HR manager at Western Enterprises, has been assigned the task of implementing
a gainsharing plan. What does Elaine most likely need to do first?
A) choose specific performance measures
B) decide how often to pay bonuses
C) establish general plan objectives
D) develop an involvement system
59) Jack is in the process of implementing a gainsharing plan for his firm. He has already
determined that the plan’s objectives will be to lower labor costs. What is the next step that Jack
needs to take?
A) choose specific performance measures
B) decide on a funding formula
C) decide how often to pay bonuses
D) select the form of payment
60) When developing the involvement system for a gainsharing plan, which of the following is
NOT a commonly used element?
A) update meetings
B) employee mediations
C) suggestion systems
D) problem-solving teams
61) What is the most common form of payment in gainsharing plans?
A) common stock
B) preferred stock
C) promotions
D) cash
62) How often do most firms tend to compute financial performance measures used in
gainsharing plans?
A) weekly
B) monthly
C) quarterly
D) annually
63) Employees at GameTime Software participate in a gainsharing plan. Employee bonuses are
calculated by dividing payroll expenses by total sales. GameTime Software most likely uses
which of the following plans?
A) Lincoln
B) Rucker
C) Improshare
D) Scanlon
64) McDonald Manufacturing contributes cash to a trust established to purchase shares of
McDonald stock for employees. Which of the following is most likely offered by McDonald
Manufacturing?
A) cash plans
B) Lincoln incentive systems
C) deferred profit-sharing plans
D) employee stock ownership plans
65) Which of the following is the primary benefit of employee stock ownership plans?
A) Firms are able to implement the plans with minimal costs and complications.
B) Firms pay distribution taxes for employees prior to retirement.
C) Firms may borrow against employee stock held in trust.
D) Employees are able to diversify their investments.
66) Research indicates that employee stock ownership plans most likely ________.
A) encourage employees to retire too early
B) place firms at greater risk for employee lawsuits
C) increase employee commitment and motivation
D) encourage transparency within global organizations
67) Top executives at DYS Enterprises are considering the idea of implementing an employee
incentive plan. Which of the following suggests that an incentive plan would NOT be
appropriate at DYS Enterprises?
A) Delays rarely occur.
B) The job is standardized.
C) Employees are unskilled but motivated.
D) A link exists between employee effort and output.
68) All of the following are essential in order for incentive plans to be effective EXCEPT
________.
A) incentives appear to be logical
B) incentives are linked to behaviors
C) rewards are attractive to employees
D) standards are clear and complete
69) Which of the following was shown by the Harvard Business School to have the greatest
impact on employee engagement?
A) feedback
B) job design
C) responsibility
D) challenging work
70) Hanover Publications has a large sales staff. Over the last two years, the HR department at
Hanover has been reviewing the firm’s sales pay plans more frequently and factoring in more
growth-oriented metrics. Which of the following most likely explains the reason for these
changes at Hanover?
A) increased globalization
B) new federal legislation
C) recent economic recession
D) employee stock option plans