CCP Executive Compensation & Benefits 3

Question 1

Which type of executive benefit provides a supplemental retirement income stream outside of qualified plan limits?

Accepted Answer

Supplemental Executive Retirement Plan (SERP)

Answer

A SERP is a nonqualified plan designed to provide retirement benefits to executives that exceed the IRS limits applicable to qualified plans like 401(k)s.

Question 2

When valuing stock options for executive compensation reporting purposes, which model is most commonly referenced under ASC 718?

Accepted Answer

Black-Scholes-Merton model

Answer

ASC 718 requires stock-based compensation to be measured at fair value, and the Black-Scholes-Merton model is the most widely used option pricing model for this purpose.

Question 3

A 'say-on-pay' vote is best described as:

Accepted Answer

An advisory shareholder vote on the executive compensation program

Answer

Mandated by the Dodd-Frank Act, say-on-pay is a non-binding (advisory) shareholder vote on the overall executive compensation program at least every three years.

Question 4

What does a 'double trigger' in a change-in-control severance agreement require?

Accepted Answer

Both a change in control AND a qualifying termination event before benefits are triggered

Answer

A double trigger requires two events: first a change in control occurs, and second the executive experiences a qualifying termination (e.g., involuntary termination or constructive dismissal).

Question 5

Which of the following best describes the role of a compensation committee's independent consultant?

Accepted Answer

To provide objective advice to the board on executive pay design and market data

Answer

An independent compensation consultant advises the board's compensation committee on market data, pay program design, and governance best practices without conflicting advisory roles to management.

(CCP) Certified Compensation Professional Practice Test

(CCP) Certified Compensation Professional Practice Test

CCP Executive Compensation & Benefits 3