Society For Human Resource Management (SHRM) Certified Professional Practice Exam

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Study for the SHRM Certified Professional Exam with flashcards and multiple choice questions. Each question includes hints and explanations to help you understand key HR concepts. Prepare for your certification with confidence!

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What is the term for the severance package that includes pay and stock options if an executive loses their job due to acquisition?

Golden parachute
Golden handshake
Executive prerequisites
Investment benefits

The correct answer is: Golden parachute

The term for the severance package that includes pay and stock options for an executive who loses their job due to an acquisition is known as a golden parachute. This term is associated with the large financial payouts and benefits that executives receive when they are terminated, often as a result of mergers or acquisitions. Golden parachutes are designed to provide financial security to executives and can include not only salary but also stock options, bonuses, and other perks. The concept behind golden parachutes is to attract and retain top executive talent by offering them protection against sudden job loss from corporate decisions that are often beyond their control. This can help reassure executives that they will be compensated appropriately, even in unfavorable situations like being laid off after an acquisition.