Designing a Customized Benefit Plan

The design features of an executive benefit plan can help drive bottom line performance and retention. Each person is different, and each person has a different idea as to what is important to them. A Senior VP who is in his fifties may think retirement is more critical than a 30-year-old, while the 30-year-old believes college education planning is vital. The key to designing an appreciated benefit plan is communication. It may not be a benefit of value without feedback on what is important to each executive.

Your executive benefit team should have experience and the ability to develop a roadmap to help your bank design a program that is well received. A checklist of questions that bank management can use to receive feedback from their key people is critical. This will sort out the important needs of the executive committee in designing a benefit plan.

GAAP accounting rules state that banks should book the maximum potential liability associated with the benefit plan. Your design firm should be able to financially model the impact of the liabilities on your balance sheet. If you are a C corporation, then you can also use a deferred tax asset as an additional offset to the accrued liability.

Compensation studies and trend analysis should also be available through your benefit provider. A number of state banking associations provide compensation studies, but these numbers can be artificially low due to personal bank ownership. Owners are driving most of their compensation through stock appreciation or dividends. These exclusions drive comparable base and bonus compensation numbers down for non-owners.

If bank management asks the right questions, they might be surprised at the wants of the executive. Long-term care benefits are growing in popularity for older executives, while college education planning options are becoming more popular for younger executives. By asking the right questions you may find that the key executive may not want as much as you think.


For more information on designing an appreciated benefit plan for your executives, please contact a consultant at Executive Benefits Network.