Executive Benefits: A Game Changer for Talent Retention

I feel the term is used broadly to define perks and benefits for a company’s C-suite executives or key employees. This could mean travel, wellness, club membership, a company car, and more.

They can all be effective, but finding the right package to attract and keep the best employees is challenging. In my experience, the best way to incentivize employees is to offer them benefits that provide tax-free or deferred income, some of which can be vested over time to ensure your top talent stays with you. 

I want to share what I feel have been the most effective products offered to executives over the 20-plus years I have been dealing with employers:

Executive Long-Term Disability (LTD)

• Employer-paid Long-term disability is typically a taxable benefit. The employer can write off 100% of the premium, so any benefits are taxable to the employee. Since these plans are typically designed at 60% of Salary, this can leave a significant gap in income for anyone disabled, but especially for executives with higher incomes that often exceed the plan maximum. Adding an Executive LTD tax-free benefit is a great way to ensure your C-suite is protected should they have a disability that may keep them out of work.

Supplemental Executive Life Insurance

• Providing additional Life insurance policy above and beyond the standard employer-paid policy is a great way to show your executives that you are protecting their family should they meet an untimely death. These can be tax-free and portable.

162 Bonus Arrangements

• This is my favorite and the most effective way to reward key executives. Under this arrangement, the executive owns a Permanent life insurance policy. The company pays for and can deduct this as a business payroll expense. The only cost for the executive is the tax due on the premium paid. The policy is designed to create tax-deferred cash value growth to be paid at a certain age or in retirement. Employers can make these bonus arrangements restrictive, which limits the employee’s ability to exercise many of the policy rights until they meet the terms negotiated in a separate employment contract. 

It’s important to know that there are other products that can be effective when designing perks for executives. I recommend working closely with your benefit consultant to design a strategy that fits your company’s goals and culture.