MKA Executive Planners Blog

This is a story about disappearing disability income benefits.  One of the worst tragedies that can befall an executive, professional or business owner is an extended period of disability as a result of accident or illness. 

CommonWealth magazine recently posted an opinion piece by Barry Koslow that focuses on executive compensation for leaders of private colleges and universities. The article begins:

You're on your way.  Your company recently completed a round of serious financing from a major hedge fund and several significant individual investors.  Management has been beefed up so that the "idea gal" can focus on what she does best -- building the greatest and newest health gizmo, one that will improve outcomes and reduce costs.

Many foreign individuals choose to invest in the United States for a variety of good reasons such as to provide for family living here, to purchase a second home, or to take advantage of the relative security of the U.S. economic system.  Those non-citizens, whether they are classified as “non-resident aliens” or “resident aliens,” face a complex set of rules based on tax codes and international treaties for income and wealth transfers.

The media and the public (not sure which drove which) have become frenzied over executive compensation, making broad-brush examples out of a few outliers.  It is time to settle down and realize the importance of a proper balance between what is actually “bad” and what is not.  Legislation and regulation are not the answer.  We need careful analysis, decision making and the willingness to act on behalf of both employees and the organization.

For most employed Americans their most valuable financial asset is not their house, car or other possessions.  It is the paycheck.  The ability to earn a living today and into the future determines our quality of life.  If your paycheck stops due to illness or injury will you be able to meet your on-going cash flow needs and future financial obligations? 

It is becoming more and more obvious that we all need to pay more attention to our long term need for capital accumulation.  Concerns are growing that the current dysfunction of our federal government and the continuing growth of entitlement programs may force more and more of the middle and upper classes to become self-reliant.  It is not a question of approval of the current direction of government.  It is whether the resources will be there to meet the promises made, while providing for other needs such as defense, infrastructure, etc.

Estates and trusts will be subject to a surtax of 3.8% on “Net Investment Income” if: (1) they have” Net Investment Income” and (2) (a) “Modified Adjusted Gross Income” that exceeds (b) a “Threshold Amount” ($11,950 for 2013).[1]

Periodically, activists and the press engage in challenging the value of executives and their compensation, especially for executives at not-for-profit organizations or non-stock for-profits such as mutual banks and insurance companies.

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.