GMAC Corporate Governance 2

Question 1

Which of the following is a key principle of good corporate governance according to the OECD Principles?

Accepted Answer

Ensuring that shareholder rights are recognized and protected

Answer

Maximizing executive compensation to attract global talent

Answer

Concentrating strategic decision-making power in the CEO

Answer

Minimizing board size to improve speed of decision-making

Question 2

What is 'say-on-pay' in the context of corporate governance?

Accepted Answer

A shareholder vote expressing approval or disapproval of executive compensation packages

Answer

A policy requiring CEOs to publicly disclose their total compensation annually

Answer

A regulation capping executive pay at 100 times the median worker salary

Answer

A board committee solely responsible for determining all employee wages

Question 3

Which type of board director is generally considered most effective at providing independent oversight of management?

Accepted Answer

Independent directors with no material relationship to the company

Answer

Executive directors who also serve as company officers

Answer

Founders who retain significant equity stakes in the company

Answer

Directors appointed directly by the company's major creditors

Question 4

What is a 'staggered board' (also called a classified board) structure in corporate governance?

Accepted Answer

A board where only a portion of directors stand for election each year

Answer

A board where directors are ranked hierarchically by years of seniority

Answer

A board that schedules meetings at irregular intervals throughout the year

Answer

A board structure mandating equal representation of different stakeholder groups

Question 5

What does 'shareholder activism' typically involve in corporate governance?

Accepted Answer

Shareholders using their equity stakes to pressure companies to change strategy or governance

Answer

Shareholders filing class-action lawsuits against company management

Answer

Shareholders coordinating mass selling of shares to express displeasure

Answer

Shareholders organizing public boycotts of company products or services

Question 6

What does 'double materiality' mean in the context of corporate governance disclosure?

Accepted Answer

The concept that companies must report both financial impacts on the firm and the firm's impacts on society

Answer

Requiring disclosures to be independently reviewed by two separate audit firms

Answer

A rule that all material information must be disclosed in two separate regulatory filings

Answer

The requirement that board resolutions need approval from two-thirds of directors to pass

Question 7

In corporate governance, what best describes the concept of 'checks and balances'?

Accepted Answer

Distributing decision-making authority across multiple parties to prevent unchecked power

Answer

A financial audit process ensuring accounting records are accurate

Answer

A regulatory review confirming board members meet independence standards

Answer

A compensation system tying executive pay to balanced scorecards