Deferred Compensation News and Updates

Deferred Compensation News brings you the latest information and insights on 409A nonqualified deferred compensation; institutional COLI, BOLI, and ICOLI; tax-and cost-efficient non-COLI funding strategies; low-cost tax managed non-COLI asset/liability designs; executive benefits benchmarking; succession planning and timely issues of executive pay and benefits. 
Featured image for “Customize Your Long Term Incentive Plans to Attract and Reward Top Talent”
March 07, 2016

Customize Your Long Term Incentive Plans to Attract and Reward Top Talent

Executive Benefits News

The following article, Customize Your Long Term Incentive Plans to Attract and Reward Top Talent, was published in the March 2016 issue of The Resort Trades and is published here with their permission. Customize Your Long Term Incentive Plans to Attract and Reward Top Talent For executives seeking a place in the c-suite, the vacation ownership industry can be extremely attractive. However, for timeshare and resort companies, University of Central Florida Rosen College of Hospitality Management Assistant Professor, Amy Gregory, Ph.D., RRP, points to indicators that suggest competition for top talent in the timeshare sector will get even tougher in the years ahead. “Research,” said Amy, “continually shows that compensation and benefits are key attractors and retainers for employees at all levels of organizations across a wide spectrum of industries. It is critical that the timeshare industry understands current trends and offerings in compensation in order to effectively compete in the ongoing bid for talent. “The relatively low penetration rate of qualified consumers that are timeshare prospects, as well as the evolution of the timeshare industry to a more flexible vacation product, signal strong future growth for the segment. This growth will continue to require strong talent that is committed to
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February 11, 2016

SEC Approves Request for Vote Proposed by BoA Shareholder

Executive Benefits News

SEC Approves Request for Vote Proposed by BoA Shareholder At Fulcrum Partners LLC, we’ve long thought that the nonqualified deferred compensation platform is ideally suited for claw back arrangements.  See how Bank of America is taking it to a new level. An article written by Deon Roberts and published by The Charlotte Observer (February-10-2016) provides updates and insights on a request from a Bank of America shareholder to present a proposal for voting that would require top executives to defer a portion of their annual pay to cover future legal expenses. Although Bank of America has fought the proposed vote, claiming it to be a matter of ordinary business operations, the Securities and Exchange Commission has determined that BoA cannot prevent its investors from voting on the proposal. You can read the entire article in the Business section of The Charlotte Observer Bank of America (BoA) Shareholders To Vote on Deferring Executive Pay for Legal Fines The Charlotte Observer stated, “The Securities and Exchange Commission has cleared the way for Bank of America shareholders to vote on a proposed requirement that its top executives have a portion of their annual pay deferred to cover future legal fines.”
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January 19, 2016

Clawback of Excess Incentive-Based Compensation: Proposed SEC Rules Changes

Fulcrum Partners News

Fulcrum Partners and the AALU have issued the following update regarding proposed SEC rules requiring member companies to clawback excess incentive-based compensation. While accepted theory often has recommended aligning executive compensation to a company’s financial performance, in light of the rules proposed by the Security and Exchange Commission, as well as other current market trends, companies may wish to reduce executive officers’ exposure to clawback by reducing compensation that is tied to the realization of corporate financial goals. The announcement is posted below and can be downloaded as a PDF on the Resources webpage for Fulcrum Partners LLC.  SEC’s Proposed Rules Requiring Member Companies to “Clawback” Excess Incentive-Based Compensation Clawback of Excess Incentive-Based Compensation, Proposed SEC Rules Changes About Fulcrum Partners LLC: Fulcrum Partners LLC is one of the nation’s leading and largest executive benefits consultancy. Its consultants focus on an integrated approach to the design, financing and plan administration of executive benefit programs. Fulcrum Partners offers its clients a unique combination of industry experts with diverse skill sets, targeted experience, and in-depth expertise in executive compensation and benefits consulting. Fulcrum Partners is a wholly independent, member-owned firm dedicated to help clients enhance their Total Rewards Strategy. About AALU: The AALU’s mission
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January 06, 2016

Key Person Life Policy Proceeds Owed to Business per Court Ruling

Executive Benefits News

Key Person Life Policy Proceeds Owed to Business per Federal Court Ruling. Fulcrum Partners LLC is pleased to share this most recent update from AALU regarding a Federal District Court of Connecticut ruling on payment of the proceeds of a Key Person Life Policy, after the employee’s retirement. In granting to the company the right to keep the policy’s death benefit, the court reaffirmed one of the uses of business owned life insurance.   (January 6, 2016) Ponte Vedra Beach, Florida Court Rules Proceeds of Key Person Life Policy Owed to Business After Employee’s Retirement SUMMARY: The widow of a former employee of a business entity called Cole Frago brought suit in the Federal District Court of Connecticut, seeking to recover the death proceeds of a life policy originally purchased as key employee coverage (key person life insurance). Cole Frago asserted that it never transferred the key employee coverage to the insured, nor did it have any obligation to do so, and the death proceeds were properly paid to the company. The insured’s widow countered that the parties’ written agreement obligated Cole Frago to offer to sell the policy to the insured at his retirement, and no such offer was ever made. The
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December 28, 2015

Employee Compensation Review

Human Resources

Employee Compensation Arrangements: Time to Review Earlier this month, Isler Dare PC  published an in-depth report on the timeliness of reviewing employee compensation and benefits arrangements. Among the points raised in the report is that of the limited correction opportunity for some types of documentary failures. As the report states: The IRS released nonbinding guidance reinforcing a limited correction opportunity for documentary failures under Section 409A of the Internal Revenue Code (“Section 409A”). Under the guidance, employers and employees can amend unvested deferred compensation arrangements to correct Section 409A documentary failures and avoid Section 409A penalties as long as the deferred compensation is unvested for the entire year in which the amendment occurs.” What You Should Do Now Regarding Employee Compensation Plans In summary, the report recommends the following: Review your unvested deferred compensation arrangements for Section 409A documentary failures. Review your “top hat” deferred compensation plan documents and assess the level of discretion delegated to the plan administrator and how it will impact the standard of review a court would use to evaluate your plan administrator’s decisions. If you’re a public company, begin preparing for the SEC proposed rule implementing the clawback requirements under the Dodd-Frank Act. Read: Time to Review Your Employee Compensation Arrangements To learn more, read the full report
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December 23, 2015

Fulcrum Partners LLC Wishes You Happy Holidays

Fulcrum Partners News

Fulcrum Partners LLC wishes you and your family a Merry Christmas and a Happy New Year May your days be merry and bright! I have always thought of Christmas time, when it has come round, as a good time; a kind, forgiving, charitable time; the only time I know of, in the long calendar of the year, when men and women seem by one consent to open their shut-up hearts freely, and to think of people below them as if they really were fellow passengers to the grave, and not another race of creatures bound on other journeys.” –Charles Dickens From The Managing Directors of Fulcrum Partners LLC: Andrew Hart, Steve Broadbent, Bruce Brownell, Scott Cahill, Joe Thompson, Roy Imai, Kristine Kopsiaftis, Tom Chisholm, Chris Nyland, Gus Comiskey, Jr., Stephen Kaufman, Phil Currie, Craig Cayford, and David Fisher  
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December 14, 2015

Fulcrum Partners Supports Vocational School in Rwanda


Fulcrum Partners LLC is proud to distribute this update, released to the national media on December 14, 2015. Fulcrum Partners Supports Vocational School in Rwanda Through Valmark Global Gift Fund PONTE VEDRA BEACH, FL – (December 14, 2015) – Fulcrum Partners LLC, ( the nation’s leading and largest executive benefits consultancy, has donated $10,000 to support construction of the first vocational school in Boneza, Rwanda. The fourteen Managing Directors at Fulcrum Partners became involved in the humanitarian project in 2014, when the work of Arise Rwanda Ministries, a 501(c)(3) nonprofit and faith based organization, was brought to their attention as part of the Valmark Securities Global Gift Fund. At that time, Fulcrum Partners made its first donation of $10,000 targeted for the project’s Phase I construction costs. One year later, Phase I of the project is nearly complete and construction on the facilities is underway. Fulcrum Partners is enthusiastic about the progress made at Kivu Hills Academy. David Fisher, a Managing Director of Fulcrum Partners, and his wife, Jeanie will spend a week at the academy when the school’s first class of vocational education students begin a hands-on learning process, participating in the construction of the school’s buildings. David Fisher said,
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December 09, 2015

Deferred Compensation: A Fresh Perspective

Executive Benefits News

A Fresh Perspective on Deferred Compensation Forbes Magazine contributor, Steve Parrish, took an interesting look at the benefits of deferred compensation in an article titled, “Delaying Today’s Compensation Could Pay Off In The Future.” Parrish  explained, in simple terms, what distinguishes qualified plans from nonqualified plans. He pointed out that many workers may not be familiar with either concept and that those who are aware of nonqualified deferred compensation plans, may incorrectly believe such plans to be relevant to only earners at the highest levels. As the article’s author identifies, the idea behind delayed compensation is hardly new: “Nonqualified deferred compensation (NQDC) plans have been around since the legendary boxer Sugar Ray Robinson signed a deal with the International Boxing Club of New York in 1957. And yet this popular compensation planning tool is still misunderstood.” See the December 7, 2015 edition of Forbes/Entrepreneurs for Steve Parrish’s complete article, including  case studies on these four earning scenarios: A professional-level employee supplements his retirement income A key employee wants ‘a piece of the company pie’ ‘Tier Two’ employees get their own incentive plan A tax-efficient succession plan for father and daughter  
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November 26, 2015

Fulcrum Partners Wishes You a Happy Thanksgiving

Fulcrum Partners News

Wishing you and your family a Happy Thanksgiving from the Managing Directors at Fulcrum Partners LLC. Steve Broadbent, Andy Hart, Tom Chisholm, Chris Nyland, David Fisher, Kristine Kopsiaftis, Roy Imai, Gus Comiskey, Stephen Kaufman, Phil Currie, Scott Cahill, Bruce Brownell, Joe Thompson, and Craig Cayford.    
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November 16, 2015

Acceleration of Benefits Following Nonqualified Benefit Plan Terminations

Executive Benefits News

Washington Report (November 13, 2015) Ponte Vedra Beach, Florida Acceleration of Benefits following Nonqualified Benefit Plan Terminations SUMMARY: This continuing series of articles is intended to provide deep insight into trends, events, and issues that impact the design and operation of nonqualified executive benefit plans (sometimes referred to as Top Hat plans). We occasionally highlight court cases that may be relevant to our clients. In this court case, the 11th Circuit held that the termination of a nonqualified deferred compensation plan and acceleration of the participant’s annuity benefits to a present value lump sum does not “adversely affect” the participant’s benefit. The court concluded that the fact that the lump sum payment results in accelerated as well as potentially higher taxes to the participant does not give rise to a claim under the Employee Retirement Income Security Act (“ERISA”). CITATION: Taylor v. NCR Corp., No. 1:14-cv-2217-WSD (U.S. Dist. Ct. N.D. Ga., Sept 23, 2015); Holloman v. Mail-Well Corp., 443 F.3d 832 (11th Cir., 2006). RELEVANCE: This case exemplifies the importance of carefully drafting plan documents. Here the court analyzed and followed the plan documents that permitted the plan to be terminated as long as it did not “adversely affect” accrued
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