Corporate Benefits
Executive Bonus Plans
Attracting and keeping top performing employees is a challenge for many businesses. Today’s work force is more mobile and willing to make employment changes in the pursuit of career advancement, than those of previous generations. A basic benefit package typically includes employer-subsidized health, disability income, group life insurance, as well as some form of pension and/or profit-sharing plan. In order to differentiate themselves, businesses may consider offering an executive bonus plan to attract and retain their valuable employees. An Executive Bonus Plan can be tailored to suit the company and is a simple and effective means to reward their top performers.
Advantages of Providing Executive Benefits to Employees:
They can be selective — the business has the ability to offer the plan to a select individual, or group of employees on a discretionary basis. In addition to selecting who receives the benefit, the business can vary the bonus amount on an individual basis. This flexibility allows the business to design a plan that appropriately rewards who they have determined to be most valuable.
Tax Deductible — the bonus amount is generally tax deductible by the business, provided it is considered reasonable compensation. This feature will often drive the decision for the business to implement a Bonus Plan over another type of benefit program.
Easy Implementation and Administration — Bonus Plans are relatively easy to set up and maintain. They offer a straightforward design based on a simple agreement between the business and the executive. A basic Bonus Plan does not require IRS approval and there are generally no ERISA reporting requirements, or restrictions.
Flexibility — Executive Bonus Plans offer a great deal of variability with respect to whom they cover, the benefits they provide, and the cost to the business. These plans can be designed to meet multiple financial needs, and create substantial incentives that can help the business draw and retain high performing individuals.
Adaptable to changing business needs — The Bonus Plan agreement may give the business the ability to amend, or terminate the plan at any time with limited notice to the executive. This may be important to smaller businesses that are concerned about being “locked” into a plan cost that they cannot reduce or suspend if the business experiences financial difficulties.