Executive Benefits
How can your company...
- Provide incentives for selected executives that encourage tenure with your company?
- Remain competitive in the marketplace for talented managers?
- Provide retirement benefits commensurate with executive pay?
- Create management benefit packages that will motivate long-term performance?
- Help assure returns to shareholders that only top performers can deliver?
- Upgrade management benefits without jeopardizing the tax-preferred status of your qualified pension plan?
The need...
- Qualified pension plans and social security provide little incentive for talented executives to improve returns for your shareholders – or even to remain with your company. In fact, qualified plan benefits can be an incentive for executives to leave, because of early vesting and full portability.
- Qualified plans may not provide top executives with retirement benefits that are in line with their pre-retirement pay levels or with their contribution to shareholder value. They provide too little benefit for too many people.
- Based upon recent studies by the American Society of Pension Actuaries, due to qualified plan and social security caps, higher paid executives will typically retire at 30-50% of their pay. That’s far below the 70-90% of final salary your lower-paid employees will likely receive in retirement (“Income Replacement in Retirement” by Robert D. Lebenson, MSPA; published by the ASPA National Retirement Income Policy Committee, © 1994).
- Because of this disparity, and the competition for talented managers, companies may create supplemental plans for their top executives.
The solution...
- Provide additional post-retirement income for selected executives.
- Establish performance benchmarks that must be attained before supplemental retirement benefits are awarded.
- Require continued employment for executives to reap benefits (“golden handcuffs”) & protect them for change-of-control risk (“golden parachutes”).
- Comply with limited ERISA restrictions on participation, funding and vesting.
- Provide performance-based incentives for executives.
- Replace benefits lost when an executive leaves a previous employer to work for your company.
The payoff...
- For the Company - Remain competitive in the market for executives who have the talent to make a difference for shareholders.
- For the Executive - Achieve greater retirement security as a reward for superior performance.
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