PT21.S2.Q14 > Analytics

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In most corporations the salaries of executives are set by a group from the corporation’s board of directors. █████ ███ █████████ ███████ ███████ ██ ██ █████████ ███ ████████ ██████ ██ ███ ███████████ ██████ ████ ██ ████ ███ ██████████ █████ ████ ███ ██ ███████ █████████████ ████████ ██ ████████ ██ ███████ ███████████ █████ █████████ ████ ████████ ████ ███████████ ██ █████ ██ ████ ██████████ █████ ████ ████ ███████ ██ █ ███████████████ █████ ███ ██████████ ██████████ ██ ████ ███████████ ███ ███ ██████ ██ ███████ ████ ███████ ████████ ██████████ ███ █████████████ █████████

Structure: Counter-Argument

The stimulus starts by discussing how, in most corporations, a group from the board of directors decides the salaries of executives. The idea behind this procedure is that, since the board of directors is supposed to ensure the corporation stays in good financial shape, they will not set executives' salaries too high.

The author then rejects this line of reasoning. He points out that most members of a corporation's board of directors are also executives of some other corporation. He argues that they can therefore benefit themselves by setting "generous benchmarks" for how much executives get paid. Thus, he suggests that the way most corporations set executives' salaries won't necessarily achieve the goal of keeping executives' salaries from being excessively large.

14.

The point made by the ██████ ██ ████ ███ ████ ██████ ███ ██ ███████ █████████████ ████████ █████ ███ ████ █████ ████████ ██ ██████ ███████

Question Type

Miscellaneous (LR)

This is an unusual question. It's basically testing our understanding of the argument in the stimulus, and specifically asking us to rephrase the support the author provides for his suggestion that the way most corporations set executive salaries won't necessarily keep those salaries from being too large. The author's premise is that most directors — i.e., most of the people who could be chosen to set executive salaries at any given company — are themselves executives elsewhere. This gives them an incentive to set a "generous benchmark" for executive salaries. In other words, they are motivated to set a high standard for executive salaries at the corporations where they are directors, presumably because this might cause their own salaries to be raised at the companies where they are executives.

most corporate executives, ██████ ██ █████ ████████ █████████ ███ ███ ███████████ █████████ ██ █████ ██████ ██ █████ ███████

Incorrect. The author never says anything about corporate executives being financially independent.

most corporate executives █████ ██ ████ ████████ ██ ███████ █████ ███ ████████ ████ ███ █████ ███████ ████████ ███████ ████ ███

Incorrect. The author never talks about a scenario where corporate executives would set their own salaries.

many board members █████ ███ █████ █████████████ ██ ██████████ █████████ ████ ████████ ███████████ █████ █████ ██ █████ ████████ ██ ███████ █████████████ ████████

Correct. The author says that board members are typically executives of some other corporation, and so "can expect to benefit themselves" by setting high executive salaries. The implication is that board members will act on this impulse to benefit themselves, rather than acting to fulfill the board's mission of safeguarding the corporation's economic health.

96%

many board members ███ ███ █████████████ ████████ ████████████ ████ ██ ██ ███████ ████ ██████ ██ ██ ██ ███ █████ ██ █ ███████████ ██ █████ ████ ██████ █████ ██ ██████ ██████████

Incorrect. The author says that board members tend to be executives at other corporations, not that they expect to become executives of the corporation where they are on the board.

many board members ███ ███████████ ██████████ ███ ████ ██ ███████ ████ ██████ ██ ██████ ██ ████████ ███ ██████████ ██ ████ ████ ███ █████ ████████████ ██ ███ █████

Incorrect. The author doesn't say anything about how the board members themselves are compensated.

PrepTest 21 - Section 2 - Question 14

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