Executive Benefit Objectives

A comprehensive executive benefit program can be designed to provide selected executives with:

• A continuing level of replacement income for the executive beyond active employment with which to reasonably maintain his or her family’s established standard of living after his or her retirement, disability or death. A 2004 study published by Georgia State University indicated that executives earning more than $250,000 had to earn over 85% of their pre-retirement income after they retired in order to preserve their after-tax level of spendable income. Retirement income would come from a combination of sources, including Social Security, qualified retirement programs, personal savings and non-qualified supplemental employer provided retirement programs;
• Programs to facilitate the executive’s ability to accumulate capital through a combination of company sponsored deferred compensation, personal pre-tax savings and investment programs, as well as through company provided performance related short-term and/or long-term incentive programs;
• Sufficient executive liquidity to settle his or her family’s cash needs upon his or her death, including paying off mortgage balances and other debt, and providing adequate cash resources to meet the executive’s estate settlement costs, including federal and state income and estate taxes, final medical expenses, etc.

Each of these objectives can be tied to “golden handcuff” requirements to encourage the executive to remain faithful to the company, and can provide for a “golden parachute” to financially protect the executive in the event of a change of control.