Keep Your Top Talent from Jumping
Ship with Bonus Grants
Presented By:
Bill Edwards
Brian Leen
Jeff Mullins
Clark Schaefer Hackett
LS Benefits Group
Taft Stettinius & Hollister
(937) 226-0070
[email protected]
(937) 435-5400
[email protected]
(937) 641-1725
[email protected]
Introduction:
Why bonus grants?
• Attract and retain top talent
• Reward and incent desirable behavior
• These arrangements are often
overlooked or misunderstood
• These arrangements are generally much
more complicated than they need to be
Learning Objectives
• How and when to create an effective
bonus grant program
• Need for and content of annual
administration
• The benefits of informal funding
alternatives
• Questions
How and when to create an effective
bonus grant program
Changing employment landscape
• Less loyalty
• More competition
• Different motivators
How and when to create an effective
bonus grant program
Why do employees leave?
How and when to create an effective
bonus grant program
Effective retention strategies
• Flexible
• Provide anchor
• Minimize legal issues
How and when to create an effective
bonus grant program
Bonus grant programs
• Not subject to ERISA
• No 5500 filing
• No discrimination rules
• Cliff vesting
• Super vesting
• Forfeiture
How and when to create an effective
bonus grant program
Where most effective?
Need for and content of
annual administration
Why bother with annual
administration for the arrangement?
• Provides a meaningful communication tool for
participants
• Provides an opportunity to communicate
results to participants
• Provides corporate history and structure
• Third party provider enhances credibility with
participants
Need for and content of
annual administration
What is included with annual administration?
• Individual participants statements, including:
o
o
o
o
o
o
o
The annual award under the program
The accumulated award under the program
Income factor, if any
The death benefit; if any
The disability benefit; if any
The participation date
The program vesting date
Need for and content of
annual administration
What is included with annual administration?
• A summary of the program liability, net of any informal
funding
• A schedule of all program participants
• A summary of program awards
The benefits of informal
funding alternatives
Liability exposure to company
• Company will accrue a liability based on
previous years “crediting” amounts to Bonus
Grant participants
• Will the company want to protect this future
liability?
• Protecting the tax status benefit through
“Informal Funding”
• Informal funding options
The benefits of informal
funding alternatives
Why we use the term “Informal Funding?”
• Employee cannot have access to the money being set
aside
• If an employee has access the benefit becomes taxable
• Risk of forfeiture
• Preserving tax status for employee
• Employee feels more comfortable if they know money is
being set aside
The benefits of informal
funding alternatives
Informal Funding options
• Unfunded
• Bank Account
• Investment Accounts
• COLI
The benefits of informal
funding alternatives
Additional benefits of COLI
• Key person protection for Company
• Life Insurance Protection for Family
• Can be integrated into Bonus Grant agreement
Advisor role in
communication
• Meet with Ownership to discuss
“crediting” on annual basis
• Report informal funding account
balance to CSH
• Review CSH report
• Meet annually with employees to
review statement
Questions?
Bill Edwards
Brian Leen
Jeff Mullins
Clark Schaefer Hackett
LS Benefits Group
Taft Stettinius & Hollister
(937) 226-0070
[email protected]
(937) 435-5400
[email protected]
(937) 641-1725
[email protected]
Thank You
Bill Edwards
Brian Leen
Jeff Mullins
Clark Schaefer Hackett
LS Benefits Group
Taft Stettinius & Hollister
(937) 226-0070
[email protected]
(937) 435-5400
[email protected]
(937) 641-1725
[email protected]
Send feedback regarding today’s webinar to [email protected].