Stocks Intermediate: Weighing Management Quality

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1.
A stock analyst might interview a companys customers to get a sense of whether the company would be a good investment.
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True. An analyst might interview customers, typically larger institutional ones.
2.
Another term for fiduciary responsibility, according to Philip Fisher, is trusteeship.
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True. Fisher described the qualities he looks for in managers as trusteeship.
3.
Whom does the board of directors of a company represent?
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The shareholders. The board is elected by the shareholders and technically represents them.
4.
The chief executive officer is accountable to _______.
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The board of directors. The chief executive officer is accountable to the board of directors, who, in turn, represent (and are elected by) the shareholders of the company. This is the primary reason we object to companies in which the CEO and chairman of the board are the same person--we believe it may lead to situations in which the CEO wields undue influence over the affairs of the board, which should be primarily independent and provide oversight of the CEO.
5.
How much money the company pays its CEO and top management is _______.
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An important sign of how the company has set up its incentive system. The compensation of top corporate officers is a touchy subject, mostly because a lot of corporate officers are paid a great deal of money. We dont have any hard and fast rules for determining how much is "too much," but at the extremes, executive pay can eat up a significant chunk of corporate profits, which eats directly into shareholder returns.