Steve Broadbent Discusses Transparency and Diversification Created by NQDC Plans

Steve Broadbent Discusses Transparency and Diversification Created by NQDC Plans

February 8, 2022
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On January 18, 2022, an article published by Agenda, an information service of Money-Media, a Financial Times company, looked at new guidance from the U.S. Securities and Exchange Commission (SEC) regarding the need for additional disclosures in cases where companies may be giving stock option awards to executives in advance of a significant corporate announcement. In writing the article, SEC Guidance on Exec Comp Puts More Pressure on Boards, the author, Neanda Salvaterra, spoke with Steve Broadbent of Fulcrum Partners about the topic.

More importantly, companies should diversify the risk for themselves and the type of remuneration packages they offer to executives, according to experts such as Steven Broadbent, the senior vice president for retirement matters at executive benefits advisor Fulcrum Partners. He has helped design deferred compensation plans and non-qualified deferred compensation (NQDC) plans with performance-based objectives for executives and company contributions.

Such NQDC plans can be paid out by companies to executives upon their retirement or other end of employment.

Companies should avoid putting “all their eggs in one basket, which from an investment perspective, may be a bad thing … for [executives to have all] potential wealth sitting in company equity or options representing future company equity,” said Broadbent. “What we’re talking about is really balancing risk, offering a different kind of asset class for investment.”

For investors, such plans yield a wealth of information, according to Broadbent, who also served as a former deputy assistant secretary for the U.S. Treasury, appointed by President George H.W. Bush.

“You can’t put in a deferred compensation plan and non-qualified deferred compensation plan in a publicly held company without filing the appropriate SEC documents in the United States,” he said. “So the investors know exactly what’s going on. They know exactly what kind of performance-based mechanisms work in these plans and there’s nothing hidden.”

It is noteworthy that SEC staff guidance, Staff Accounting Bulletin No. 120 is not a regulation, but is instead, guidance on best-practices regarding disclosures.


This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. Any tax advice contained herein is of a general nature. You should seek specific advice from your tax professional before pursuing any idea contemplated herein.

Securities offered through Lion Street Financial, LLC (LSF) and Valmark Securities, Inc. (VSI), each a member of FINRA and SIPC. Investment advisory services offered through Lion Street Advisors, LLC (LSA) and Valmark Advisers, Inc. (VAI), each an SEC registered investment advisor. Please refer to your investment advisory agreement and the Form ADV disclosures provided to you for more information. VAI/VSI and LSF/LSA are non-affiliated entities and separate entities from OneDigital and Fulcrum Partners.

Unless otherwise noted, VAI/VSI, LSF/LSA are not affiliated, associated, authorized, endorsed by, or in any way officially connected with any other company, agency or government agency identified or referenced in this document.

Lion Street Advisors // Lion Street Financial

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