Executive Compensation and Fringe Benefits
Today’s competitive labor market makes it increasingly difficult for businesses to hire and retain highly skilled employees. The Hebets Company’s Executive Compensation and Supplemental Fringe Benefits division assists these enterprises in designing and implementing innovative compensation and benefit programs for purposes of recruiting and rewarding those key executives who are instrumental to the profitability of the company. Legislative changes over the years have repeatedly reduced the qualified plan benefits that can be allocated to this select group of highly compensated employees resulting in “reverse discrimination”. But there are many worthwhile solutions.
The Hebets Company’s staff has broad based knowledge in both qualified and non-qualified retirement benefit plans, as well as other fringe benefit programs. Alternatives include: Deferred Compensation Plans, Supplemental Executive Retirement Plans (SERPs), Executive Life and Disability and Long Term Care Insurance arrangements; Performance Based Plans; Equity Based Plans (both real and phantom) and Benefit Restoration Plans. A plan can even be designed to allow the company to recover 100% of the cost of the plan at a future date. A comprehensive program can be designed that integrates several types of benefits in a manner that aligns the interests of both the executives and the company. The Hebets Company will facilitate the implementation of these benefit programs by performing the following services:
Brainstorming – Often a client is only vaguely familiar with the options available to attract, retain and reward their key people including themselves as owners. We may initiate one or more meetings for a general discussion of each possible method and their relative merits and weaknesses from the perspective of both the business owner and the individual executive.
Plan Design – We will financially model each separate option to assist the client in evaluating the most appropriate plan design. Special care is given to assessing issues such as cash flow, effects on earnings, income tax, benefit adequacy, fairness and appropriateness, any effect on lending covenants, and affordability in varying economic climates.
Plan Communication and Implementation – We will provide or assist with the preparation of all enrollment and communication material. We will personally enroll the plan participants, and conduct both group and individual enrollment sessions. Alternatively, you may have us prepare the necessary materials to facilitate on-line enrollment.
Plan Documentation – We will assist in the preparation of all legal documents supporting the plan.
Benefit Financing – We will model the options for financing. These include the three most classic approaches of (1) Naked Promise- pay as you go, (2) Sinking Fund and (3) Corporate Owned Life Insurance (COLI). We will provide a present value analysis on the cash flow and true cost of each approach.
Benefit Securitization – We will compare and contrast the available choices such as (1) Rabbi Trusts, (2) Secular Trusts and (3) Third Party Indemnity Agreements.