FREE ESOP QUIZ (Directors)

Welcome to our Free ESOP Quiz for Company Directors. This sample, of our full training and testing, is designed for people who are considering being an internal director for their company. This ESOP quiz is a small sample of the over 300 questions of our ESOP Director training and testing, to help you see if you are up to speed on being an ESOP Board Member. There is significant personal liability being an ESOP Director, as ERISA law states a Fiduciary, which is an ESOP company director, cannot be indemnified by the company from fiduciary breaches.

We designed our FULL ESOP Director training and testing as a means to help your company implement best practices to mitigate your personal fiduciary liability, and by educating and testing the student on these best practices. This ESOP quiz for company directors was designed to quickly assess your knowledge to know if you should take our full training and testing. Please take a few minutes and answer the TRUE or FALSE questions; as they describe your company and your personal knowledge of ERISA in certain ways that can help you understand if you are ready to take on this very important role.

We also designed our ESOP quiz so that you will receive an email with your answers, in order to share those answers with your advisors and/or others. We do not collect email addresses to sell to others, nor share with anyone outside of the advisors participating in our website.

Please Take our 21-point ESOP Quiz below
1) The Sarbanes-Oxley Act of 2002 enhanced the duty standards that apply to directors to include the duty of prudence or process
2) Risk management is the identification, assessment, and prioritization of real or potential risks
3) The Board’s primary function is to supervise and approve activities that increase risk
4) “Wrongful Acts” are excluded from Directors and Officers Insurance
5) If the Board does not assign the role of retirement plan administrator, the fiduciary liability falls back onto the Board.
6) When the Board decides who will be a fiduciary, they become a fiduciary
7) Capital stock is the stock the company buys back from shareholders
8) Approving officer compensation is a conflict of interest for an internal Board with no independent directors
9) A key measure of a privately held company’s Board is their ability to retain loyal shareholders
10) In an S-Corporation, company profits are taxed as income in the shareholder's personal tax returns.
11) The difference between the articles of incorporation and the bylaws is that one document details how the company defines shareholder rights, and the other document outlines the rules for managing the company
12) One possible concern for electing to convert to an S-Corporation from a C-Corporation is the tax triggers that may occur
13) In a 100 percent ESOP company, the ESOP trustee is the actual shareholder, not the participants
14) “Capitalization of earnings” refers to a version of discounted future cash flows or earnings that include a rate of return for the risk of buying the company’s stock
15) The company president is usually responsible for filtering out offers to buy the company before the Board gets involved
16) Once the company receives a Letter of Intent by the prospective buyer, the trustee and shareholders must be informed
17) In most cases, the ESOP trustee will require the Board to obtain a “fairness opinion” from an independent financial advisor
18) The Board is required to explain their reasoning for selecting the buyer and what choices they had in the selection process to the shareholders
19) Working capital is equal to the difference between current assets and current liabilities
20) For banking purposes, EBITDA must be greater than the debt payments in order to secure a loan
21) In a merger and acquisition transaction or offer, directors should consider hiring financial advisors to protect themselves from duty of care issues
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