Executives.

Executive Benefit Plans—we design cost-effective and efficient programs to meet your executives’ personal needs and goals within the context of your overall corporate financial goals.

Executive benefits enable you to attract key employees and executives who will contribute to your company’s growth and profitability, selectively reward these individuals, and retain them for the longest possible time.  We design, implement, and administer executive benefit plans that supplement restrictive qualified retirement and group insurance plans, and include the following:

  • Salary Continuation Plans
  • Split Dollar Insurance Plans
  • Deferred Compensation Plans
  • Supplemental Executive Retirement Plans (SERP)
  • Executive Bonus Plans
  • Executive Group Term Carve Out Plans
  • Executive Disability Income and Long Term Care Plans

While employee stock options and programs such as 401(k) plans are a good start, they may not meet the financial expectations of your most talented executives.  Executive employees want to establish sound financial security, pay for their children’s college education, and enjoy a rewarding, worry-free retirement.  They participate in retirement programs to make these dreams realities.  Government limitations may be weighing on your current benefit programs, challenging your ability to help executives achieve their lifestyle goals.  We are chosen as trusted corporate advisors because we know how to carefully evaluate current costs and benefits, and explore possibilities for better, more efficient programs that help executives reach and protect their financial objectives.

Beyond the 401(k).

As more Americans become responsible for their own retirement, 401(k) plans help to address an increasingly important financial need.  Though for many executives, the yearly investment limit is far too restrictive to fulfill their needs.  What other options exist?  Deferring compensation can be a solution to limitations in traditional qualified plans, and nonqualified deferred compensation plans can be designed to mirror familiar features of basic 401(k) plans, but without the cap on the dollar amount saved or contributed.  These plans allow deferral of various forms of pay, including base, bonus, commissions, and special incentives.  Additionally, the arrangement of more flexible payout schedules can broaden options for executives.  

Retirement-focused planning is only one feature of today’s nonqualified deferred compensation plan design.  For a younger executive that may need to prepare for tuition payments, a plan that allows for payouts before retirement may be more attractive.  Nonqualified deferred compensation programs can be constructed to make it easier for your executives to handle significant expenses, such as education expenses, a retirement home, or any anticipated future expense.  For example, your nonqualified plan could allow an executive to elect distribution of four annual payments beginning in a future year to finance tuition and expenses for a child entering college that year.

Including Performance Pay and Incentives in Disability Programs.

In an era that has emphasized stock options and bonus compensation, executives may find their performance pay is not part of their current supplemental disability equation.  Executives may be surprised to find that they would receive only a portion of what they anticipated in the event of a long-term disability.  Often, this is not the intent of the company, but rather an oversight.  With today’s compensation mix for top employees comprising perhaps 20% to 30% salary (and 70% to 80% incentive bonus and stock options), an executive would receive only about 15% of total compensation if disabled, while suffering a significant lifestyle change.  Many long-term disability plans were designed and implemented at a time when executive compensation was more heavily comprised of base salary.  These plans were designed to meet corporate clients’ goals: providing basic benefits for the average covered employee, usually through a group plan, encouraging a return to work and doing so at the lowest possible cost.  Highly compensated employees usually fall short in plans designed to deliver a percentage of base pay “only” as disability benefits, even if income tax free.  This is simply because of the disproportionate amount of total compensation arising from incentives, bonus, stock options, and other forms of contingent compensation.  Supplemental plans can be designed to give executives the opportunity to cover these other sources of compensation.

Supplemental Executive Retirement Plans.

Supplemental Executive Retirement Plans (SERPs) solve retention and motivation problems, helping retain key executives for the continuity of your corporation’s success.  SERPs must be limited to a top group of executives and/or directors due to the penalties that could arise through ERISA-based claims if a plan covers more than a top group.  These types of plans are commonly called “nonqualified” because they cannot meet the broad coverage rules that are necessary to secure the special tax treatment afforded to tax-qualified retirement plans.  Although not without tax risk, a SERP may permit executives to self-direct the measures for the return on their account balances.  The employer usually selects the range of available choices in order to facilitate plan administration.

For some executives, a significant portion of their anticipated retirement income will be derived from employee stock ownership plans.  SERPs are a viable and popular alternative for top long-term executives concerned about the concentration of their post-retirement wealth in stock options.  However, executives who have benefited from the bull market or an IPO and no longer need their SERP benefits for worry-free retirement living may prefer exchanging or converting the SERP value for more efficient estate planning tools.  Benefit Conversion Options or “swaps” help such executives do more with their rewards.

BCG Companies Headquarters

The Turning Basin Building | 111 Virginia Street, Suite 401 | Richmond, VA 23219 (map)
804.648.0005 | 804.648.0035 (fax) | info@bcgco.com