MKA Executive Planners Blog

While there are many reasons that a Board should consider, design and implement supplemental benefit plans for their top executives, professionals and performers, this discussion will focus on five of them.

Such plans generally include Supplemental Retirement Plans (SERPS), Supplemental Disability Income programs, Capital Accumulation Programs (Options, Phantom Stock, and Performance Shares), etc.

Let's look at the five Rs: -- applicable to for profit and not for profit organizations alike:

1. Recruitment -- uncompetitive incentive, capital accumulation and retirement benefits will lead to roadblocks in the hiring process;
2. Rewards -- organization goals are key to sustainability, growth and profit (increasing fund balances) and should be part of normal compensation programs, but the stretch goals should be met with stretch compensation;
3. Retention -- "supplemental plans" are just that.  In exchange, the participant should be agreeable to vesting or other service or performance based contingencies, including appropriate "clawbacks";
4. Retirement -- broad based retirement programs such as pension, 401(k), 403(b), Cash Balance, etc., provide limited benefits for highly compensated achievers.  Deferred Compensation Plans and SERPS are used to offset reverse discrimination. 
5. Reverse Discrimination -- Despite the clamor of the press and politicians, nearly all top level executives and professionals are subject to lower benefits (as a percent of salary) than their rank and file employees. 

Thus, from the time a position is available, Boards and Senior Executives should cast an eye towards how their traditional benefits actually apply to their top people. 

For further information contact Barry N. Koslow, JD, at 781-939-6050 or  koslow@mkaplanners.com.

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This article should not be considered as providing accounting, business, financial, investment, legal, tax, or other professional advice or services.  It is not a substitute for such professional advice or services, nor should it be used as the basis for any decisions or actions that may affect your business or you personally.  This should only be one part of your research.  You should seek authoritative guidance from a qualified accountant or attorney before taking any action.

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