Stocks Intermediate: Weighing Management Quality

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1.
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.
2.
To learn about a prospective company, stock analysts might interview _______.
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All of the above. An analyst might interview all of them, and others as well, such as suppliers.
3.
Investors should look for companies that _______.
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Have set clear goals for measuring progress. Good measurement is good management.
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.
You can get information on the backgrounds and qualifications of the managers of companies you are interested in from the Securities and Exchange Commission.
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True. Companies include information on their managers in their shareholder statements, which are filed with the SEC.