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CECP WorldatWork Certified Executive Compensation Professional Free Practice Exam Questions (2025 Updated)

Prepare effectively for your WorldatWork CECP Certified Executive Compensation Professional certification with our extensive collection of free, high-quality practice questions. Each question is designed to mirror the actual exam format and objectives, complete with comprehensive answers and detailed explanations. Our materials are regularly updated for 2025, ensuring you have the most current resources to build confidence and succeed on your first attempt.

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Total 100 questions

What is the most common term for the broad framework of principles and approaches that guide day-to-day decisions affecting the business, including how it positions itself in the market?

A.

The business plan

B.

The corporate objective

C.

The mission statement

D.

The competitive strategy

The XYZ Company focuses on maintaining/increasing market share and its products tend to be more evolutionary than revolutionary. What stage of the business lifecycle is XYZ most likely in?

A.

Start-up

B.

Growth

C.

Mature

D.

Decline

Which financial statement or combination of statements provide(s) the most comprehensive view of the company’s financial situation?

A.

The balance sheet

B.

The income statement

C.

The cash flow statement and the income statement

D.

The cash flow statement, along with the balance sheet and income statement

What type of equity incentive gives employees the right to purchase company shares at a specified price?

A.

Stock/share options

B.

Stock/share grants

C.

Restricted stock/shares

D.

Performance units   

What best describes the two primary elements of compensation?

A.

Fixed pay and variable pay

B.

Base pay and annual incentives

C.

Direct and indirect compensation

D.

Salary and hourly rate   

Which of the following is a type of variable pay?

A.

Salary

B.

Piece rate

C.

Hourly rate

D.

Commissions   

What is a primary objective of profit-sharing and performance-sharing variable pay plans?

A.

To achieve organizational cost savings through base pay reductions

B.

To increase employee identification with the organization's success

C.

To defer compensation expenses to future reporting periods

D.

To reward individual employees for some significant contribution   

Regarding fixed and variable costs, what tends to happen as revenue increases?

A.

Variable costs decrease

B.

Fixed costs decrease

C.

Variable costs increase and consume a higher percent of revenue

D.

Fixed costs remain the same and consume a lower percent of revenue

What is a primary purpose of pay grades or bands?

A.

To identify a compensation range in which to group multiple jobs with similar value

B.

To meet legal and regulatory requirements for classifying jobs according to market value

C.

To provide documentation that supports termination decisions

D.

To justify paying some employees less than market based on internal administrative limitations   

You have been asked to develop a short-term incentive plan that motivates employees in business units to increase productivity. Your team has designed a plan that rewards managers and employees quarterly based on achievement against target on measures that should generate productivity increases that will self-fund the plan. When presenting the plan to senior management, what would be the best strategy to receive approval?

A.

Demonstrate how it is aligned to the rewards philosophy, principles and organizational business strategy

B.

Provide details on the plan design and measures and how they will be administered to employees at different levels

C.

Make the case that a self-funded plan poses no risk to the organization while creating the potential for significant gains

D.

Identify in advance the priorities of the various stakeholders and design your presentation to address any objections or perceptions they may have

What is a “profit model?”

A.

The intention or purpose of the business

B.

A descriptor for how the company works

C.

The financial objectives of the organization

D.

The plan for how the organization generates revenue and makes money

What question is answered by the organization’s mission statement?

A.

What direction will we take?

B.

How do we work?

C.

Why are we in business?

D.

How will we achieve our objectives?

As a general rule, what are individual contributors most likely to ask about their compensation?

A.

What the take-home pay will be

B.

How their pay compares to co-workers

C.

How the company sets compensation budgets

D.

How the company makes pay decisions that affect them

Which of the following best describes the most likely perspectives of different groups in the organization that compensation professionals must be aware of?

A.

Investors and Finance want to see money spent wisely. Legal must ensure compliance, and HR and operating departments want to see their needs taken into account to attract, retain and motivate a high quality workforce.

B.

Operating departments and HR understand the company must live within its means and Finance cannot allocate funds to a budget if it is likely that profitability will be adversely affected.

C.

Investors want to maximize gains and want to see compensation tightly controlled and Legal needs to ensure that compensation plans do not attract undue scrutiny.

D.

Operating departments view compensation as it applies to them, HR must balance available resources to attract, retain and motivate employees and Finance knows the value of a motivated workforce and will provide the budget necessary to achieve it.

Which of the following factors has the greatest impact on how aggressive a stance (high vs. low) an organization will take in terms of where it positions itself against the market with its compensation strategy?

A.

The industry it operates in

B.

The bottom line

C.

The organizational headcount

D.

The risk tolerance of compensation leaders

What best describes an effective approach for balancing multiple priorities and perspectives regarding compensation?

A.

Being firm and uncompromising in your decision-making

B.

Representing your view with data and relating it to business results

C.

Finding a compromise that may not appease all stakeholders but does not give any one group or person everything they are seeking

D.

Giving priority to perspectives based on the job or influence level of the stakeholders

Which of the following is the earnings available to equity owners after paying debt and taxes?

A.

EBIT

B.

EPS

C.

Net income

D.

Operating profit

What is the most accurate statement regarding forecasting?

A.

It is a precise estimate of what the future holds for the organization.

B.

It is done primarily by using historical revenue and expense data.

C.

It is done primarily by evaluating market conditions and economic indicators.

D.

It uses internal and external factors to help answer questions about business expectations for the future.

How are the compensation communication needs of managers different from those of individual employees?

A.

They aren’t. Managers are concerned about their compensation also.

B.

They are also responsible for merit increases, incentives and hiring so they have greater information needs.

C.

They tend to have more influence, so it is important to resolve any concerns they have quickly and efficiently.

D.

They have more duties and responsibilities and are less likely to have the time to discuss compensation issues.

What is the top line or starting point of an organization’s income?

A.

Gross profit

B.

Revenue

C.

Net income

D.

Operating profit

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Total 100 questions
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