Corporate GovernanCe exam Questions
with answers rated a+
what does the renumeration/compensation committee do on the board of directors? ✔✔ sets executive
compensation, commensurate with responsibilities and performance
what does the nominations committee do on the board of directors? ✔✔ handles recruiting of new
(independent) board members (this will effect whether or not the board works for the benefit of
shareholders)
what is the most important piece to consider about corporate governance to ensure than board
members are acting in the best interest of shareholders? ✔✔ they must be independent from
management and act as a fiduciary of shareholders
what are the important factors to consider when analyzing a firm's code of ethics? ✔✔ 1. make sure the
board of directors receives relevant corporate information in a timely manner
2. ethics codes should be in compliance with the corporate governance laws of the location country and
the local stock exchange
3. the code should prohibit advantages to the firm's insiders that are not offered to shareholders
4. a person should be designated to be responsible for corporate governance
5. if selected management personnel receive waivers from the ethics code, reasons should be given
6. the firm's ethical code should be audited and improved periodically
what is a proxy vote? ✔✔ a ballot cast by one person on behalf of another
what is share blocking when talking about proxy votes? ✔✔ a mechanism that prevents investors who
wish to vote their shares from trading their shares during a period prior to the annual meeting
when looking into whether or not voting is confidential for shareholders what is it important for analysts
to know? ✔✔ 1. does the firm use a third party to tabulate votes
2. does the third party rating voting records
with answers rated a+
what does the renumeration/compensation committee do on the board of directors? ✔✔ sets executive
compensation, commensurate with responsibilities and performance
what does the nominations committee do on the board of directors? ✔✔ handles recruiting of new
(independent) board members (this will effect whether or not the board works for the benefit of
shareholders)
what is the most important piece to consider about corporate governance to ensure than board
members are acting in the best interest of shareholders? ✔✔ they must be independent from
management and act as a fiduciary of shareholders
what are the important factors to consider when analyzing a firm's code of ethics? ✔✔ 1. make sure the
board of directors receives relevant corporate information in a timely manner
2. ethics codes should be in compliance with the corporate governance laws of the location country and
the local stock exchange
3. the code should prohibit advantages to the firm's insiders that are not offered to shareholders
4. a person should be designated to be responsible for corporate governance
5. if selected management personnel receive waivers from the ethics code, reasons should be given
6. the firm's ethical code should be audited and improved periodically
what is a proxy vote? ✔✔ a ballot cast by one person on behalf of another
what is share blocking when talking about proxy votes? ✔✔ a mechanism that prevents investors who
wish to vote their shares from trading their shares during a period prior to the annual meeting
when looking into whether or not voting is confidential for shareholders what is it important for analysts
to know? ✔✔ 1. does the firm use a third party to tabulate votes
2. does the third party rating voting records
