SHRM Total Rewards & Compensation 5

Question 1

Which long-term incentive grants employees the right to purchase company stock at a predetermined price after a vesting period?

Accepted Answer

Stock options

Answer

Stock options grant the holder the right to buy shares at a fixed exercise (strike) price, profiting if the stock price rises above that price.

Question 2

An organization surveys 10 peer companies and finds its average pay is at the 50th percentile of the market. This organization's pay philosophy is best described as:

Accepted Answer

Match the market

Answer

Paying at the 50th percentile reflects a 'match the market' philosophy, aiming to be competitive without paying above or below average.

Question 3

Which component of total rewards strategy addresses flexible scheduling, remote work options, and employee well-being programs?

Accepted Answer

Work-life effectiveness

Answer

Work-life effectiveness encompasses programs that help employees balance personal and professional responsibilities, boosting engagement and retention.

Question 4

A company provides a non-qualified deferred compensation plan. Which statement is true about this plan?

Accepted Answer

Employee contributions reduce current taxable income but funds remain at risk from company creditors

Answer

Non-qualified deferred compensation plans defer employee taxes on contributions, but plan assets are unsecured and subject to employer insolvency risk.

Question 5

Which job evaluation method ranks all jobs from highest to lowest value without analyzing individual factors?

Accepted Answer

Job ranking method

Answer

The job ranking method is the simplest evaluation approach, ordering jobs by overall worth without breaking down specific compensable factors.

SHRM - Society for Human Resource Management Practice Test

SHRM - Society for Human Resource Management Practice Test

SHRM Total Rewards & Compensation 5