Date post: | 22-Jan-2018 |
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Business |
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Panelists
Robert DiGioreLawley Benefits
Diana SouthallHR Foundations, Total Rewards
Tom ZuggerMass Mutual
Agenda
Problems with Rewards in Smaller Organizations
3 Solutions for Linking Rewards with Results
Elements of a Total Compensation Portfolio
Short Term vs Long Term Rewards
Case Study- Long Term Incentives
Typical Reward Design Process
Questions & Next Steps
Problems- Bonus is
Incentive Plan BrokenSeen as entitlement, No “line of sight,” or
Formula doesn’t match individual contribution or results
Variable Profits You don’t want a plan with a
guaranteed incentive payout, that
costs more than you can afford
Problem: 401K Maxed
Maxed outKey people contribute to 401K plan
limits, so extra compensation is paid
out with a large tax bill
The Solution- Reward Key People
To share pay and profits based on their role and their results
For building long-term business value (not just this year’s profits)
To think like an owner (without giving away shares)
To stay with the company and put their heads and hearts into building it with you
4 Compensation Goals
Reflect Internal Role
01
Market Competitive
02
Aligned to Business Goals
03
Drive Ownership Thinking
04
4 Elements of Total
Compensation
BenefitsMembership & Loyalty
Change in
PayPay for Performance
IncentivesResults Gain-sharing
Base PayRole &
Responsibility
Short Term &
Long Term
Promise: Pay for PerformanceWhen managers do the Right Things that produce profits and grow the long-term business value, plan shares the gain
Promise- Team
Key people feel they're rewarded to
work with you together to achieve the
business goals
Promise- Ownership thinking
People engage their heads and hearts,
and make decisions that build the
business
Benefit: Long Term Incentive Plans
Varies
• Annual funding based on profit levels
• Adjusted based on individual results
Retain
• Focuses on long term value creation
• “Golden handcuffs” – vested payout
Taxes
• Tax deferred instead of W2 payout
• Additional retirement vehicle
Owner
• Defer compensation for stock transfer
• Provide fund for owners retirement
CASE STUDY: Mr. Client, Age 45, Ultra Preferred, Non Tobacco, Whole
Life Legacy 10 Pay, Face Amount $230,717
Year AgeAnnual
Premium
Annual
Retirement
Income
Cash Value Death Benefit
1 46 10,000 3,531 230,787
5 50 10,000 40,853 237,304
10 55 10,000 104,134 253,936
15 60 141,174 296,784
20 65 23,061 165,928 304,226
21 66 23,061 151,656 270,908
22 67 23,061 136,301 238,103
23 68 23,061 120,279 218,690
24 69 23,061 103,456 198,444
25 70 23,061 85,784 177,297
26 71 23,061 67,220 155,239
27 72 23,061 47,717 132,229
28 73 23,061 27,225 108,284
29 74 23,061 5,719 85,060
35 80 16,675 89,443
40 85 26,491 91,744
45 90 34,020 91,221
50 95 34,316 81,297
55 100 42,831 42,831
MassMutual Life Insurance
CompanyThomas R. Zugger, CLU, ChFC, CLTC
Robert DiGiore
*Dividends are neither estimates nor guaranteed, but are based
on our 2016 dividend scale. Dividends in the future may be lower
or higher, depending on the company's actual experience.
Reward Design Process
Total Reward
Compensation
Plan
Business
PlanIdentify
what
creates
business
value
Dash-
boardsTrack
Review
Improve
Business
Metrics
RolesClarify roles
responsibility,
accountability
expected
performance
TargetsEstablish
and value
reward
targets
(base pay,
incentives)
DesignReward
results,
reduce tax,
retain value,
plan for
transition
ModelForecast
payouts and
future
values to
ensure
meets goals
InvestmentsSelect investment
vehicle and plan
design
Complimentary
Total Rewards Evaluation
Schedule ConsultationDiana & Robert
EvaluationIdentify your needs
Outline Game PlanProject timeline and investment
Design PhaseCustom Rewards Plan
01
02
03
04
Total Reward EvaluationEvaluate your current key people, plans, business and owner long term goals
Game Plan ProposalSpecific detailed outline of timeline and investment to create & implement your Total Rewards Plan