American Benefit Corporation
Case Study 2 - Corporate Contributions Increase Retention American Benefit Corporation specializes in developing strategic solutions to executive benefit needs.
At American Benefit Corporation, we design, fund and manage executive non-qualified benefit plans for highly compensated corporate executives who wish to reduce current income taxes and form personal capital on a tax efficient basis. Established more than 30 years ago, we serve the unique needs of executives in numerous corporations with their personal capital formation objectives.
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Securities offered through M Holdings Securities, Inc. A Registered Broker/Dealer, member FINRA/SIPC. American Benefit Corporation is independently owned and operated.
American Benefit Corporation is a member of M Financial Group. Please go to www.mfin.com/DisclosureStatement for further details regarding this relationship.
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Corporate Contributions Increase Retention
An international bank with a strong United States presence was in a highly competitive geographic market and wanted to retain and selectively reward a group of their top people. The bank was experiencing a high level of turnover in the early years of an executive's employment while executives who stayed with the bank for five years or more seemed to stay long term.
The bank implemented a deferred compensation plan with these funding components:
1) The executive is permitted to defer a maximum of 25% of his base and bonus compensation.
2) The bank mandated that 25% of the annual bonus be paid into the plan and that it vest at 25% per year. The executive could be paid this part of the
bonus at the end of four years of service or he could elect to defer it long term. Each year of bonus deferral started a new four-year vesting period
for the current year's plan contribution. With this structure the executive always has funds at risk unless the bank elects to waive the vesting
schedule, as they are allowed in a non-qualified plan.
3) There is also a discretionary profit sharing contribution to the plan. The amount of the total contribution is determined by the Bank Board of Directors and its allocation to each executive is determined by the CEO. All amounts are, again, subject to four-year class vesting. The vesting schedule serves as a retention tool.
Securities offered through M Holdings Securities, Inc., a Registered Broker/Dealer, Member FINRA/SIPC. American Benefit Corporation is independently owned and operated.