Vol. 8 No. 2 RCG Magazine

26 31

158Table of Contents:

Disability, Risk Management & Executive Compensation Plans

Charles T. Lanigan, JD, CLUPrincipal - Disability, Risk Management

RCG|Benefits Group

What Small Businesses Can Learn From Baseball

William L. MacDonaldChairman, President, & CEO

RCG|Executive Compensation & Benefits Group

Thought Leadership in Executive Compensation

Lawrence G. RobinsonPrincipal

RCG|Executive Compensation Group

How to Protect Lump Sum Distributions Against the

Pummeling Force of Taxes

William L. MacDonaldChairman, President, & CEO


featured:

Visit Page 2 to read ...By: William L. MacDonald

Chairman, President, & CEORCG|Executive Compensation & Benefits Group

The $400,000 Question to Ask Your Employer

2 • Vol. 8 No. 2 www.retirementcapital.com

Who would not want to hit the reset button on the last decade? It’s been one wild ride for anyone with money in stocks. Historic and radical fluctuations in the market have left most us with nothing to show for an entire decade of investment—a painful negative

(1.19) percent return for the period 1999 to 2009.

Particularly hard hit are executives near retirement in the next ten years. They are worried. What if this wild ride does not level out soon? What can be done today to move ahead with some measure of confidence?

Chart I

Source: http://en.wikipedia.org/wiki/S&P_500_index

Vol. 8 No. 2 • 3www.retirementcapital.com

Lift the LimitsInstead of spending another moment on worry, simply take control. Establish well-defined after-tax retirement income goals, adjusted for inflation. Determine if your retirement assets are sufficient to meet those goals. If you are not on track, look for a way to produce financial security through tax efficiency. One way is through your employer-sponsored nonqualified deferred compensation (NQDC) plan where no limits are placed on pre-tax contributions.

Investment earnings are tax deferred on the accumulation balance in a NQDC plan. You only pay income tax when you receive a distribution from your account. That’s why a NQDC plan can generate growth more rapidly than a personal after-tax investment earning the same rate of return. For example, Chart II illustrates the success of a 45-year old executive investing $100,000 pre-tax versus $60,000 after tax. In effect, compounding money taxed-deferred hits the accelerate button on your retirement plan.

Chart II

Note: 40% Income Tax Rate; 30% Blended Tax Rate on Investments

Three Key StepsTo kick-start your tax-deferred retirement accumulation, participate in and contribute regularly to your employer’s 401(k) plan. It is a bewildering fact that 30 percent of eligible employees do not participate in 401(k) plans. Yet close to 40 percent of Americans are extremely or very concerned they will never be able to retire. [Harris Interactive 2009]

Of course, 401(k) plans and social security payments are chock full of restrictions and cannot provide enough retirement savings for the highly compensated. People live longer, retire earlier, and engage in more active lifestyles. All of which takes more money. If your employer is enlightened and offers a NQDC plan, you are one of the fortunate who can fill the retirement gap with the glue of tax-deferrals. Chart III below proves the concept.

Personal Investment DeferredAlternative Compensation Plan

Plan Investment Returns Investment ReturnsYear 6% 10% 6% 10%

1 62,520 64,200 106,000 110,000 2 127,666 132,894 218,360 231,000 3 195,548 206,397 337,462 364,100 4 266,281 285,044 463,709 510,510 5 339,985 369,197 597,532 671,561 10 757,621 887,016 1,397,164 1,753,117 20 1,900,838 2,631,911 3,899,273 6,300,250

After-tax Annual Retirement Benefit at age 65 payable for 10 years:227,155 350,210 299,879 559,275


The Big GapChart III

What Causes the Retirement Gap?The IRS limits total contributions to a qualified plan such as a 401(k).Qualified plans are also subject to coverage and discrimination testing that may limit both employee and employer contributions to the plans. For perspective, let’s quickly review limitations imposed on qualified plan for 2009:

401(k) Retirement Plans

• An employee is “highly compensated” if he/she earns $110,000 in the preceding year

• Discrimination testing may limit deferrals (deferrals made by the highly compensated are limited by the amounts deferred by general employees)

• $16,500 maximum deferral ($22,000 if age 50 or older)

• Company contributions are limited to $49,000

• $245,000 maximum eligible compensation limit

Defined Benefit Plans

• $195,000 maximum benefit payout

• $245,000 maximum eligible compensation limit

Individual Retirement Accounts

• $5,000 maximum contribution ($6,000 if age 50 or older)

• Employees with adjusted gross income greater than $105,000 (married) or $63,000 (single) cannot deduct contributions to an IRA account if participating in a qualified retirement plan (IRC Sec. 408)


Filling the GapAs discussed earlier, NQDC plans allow executives to tax defer unlimited amounts of compensation (no maximum amount) to help accumulate money sufficient to reach retirement goals. By compounding interest in a tax-deferred, tax-advantaged NQDC, you don’t need to focus on high annual crediting rates. Consider that if you want to achieve a return equivalent to tax-deferred savings, your after-tax savings needs to generate more than a 40 percent higher return. That means a more aggressive investment with greater risk, a situation few executives near retirement want to tackle.

Chart IV

When you invest in equities like the S&P 500, volatility must be considered. As illustrated in Chart I, returns will fluctuate. We need returns between 6 and 12 percent in order to accumulate the money needed for retirement but, again, those with the shortest lead time to retirement, ten or fewer years, are hard-pressed to take market risk.

A “Stable” SolutionCan you gain higher returns without the risk of the market fluctuation? In the past, it was next to impossible in your traditional nonqualified plan. Now, however, through the use of an S&P 500 index fund, participants can receive the upside of the S&P 500 (with a cap of 12%) with no downside risk.

Chart V

If Your Tax-Deferred Rate of Return Is:

You Need This Rate Of Return without Tax Deferred:

6.0% 8.8%8.0% 11.4%10.0% 14.3%12.0% 17.1%

Note: 40% Income Tax Rate; 30% Blended Tax Rate on Investments


Chart V shows the impact this type of fund would have had over the last 10 years in your retirement scenario. Instead of a negative 24.00 percent total effective yield, you would have 63.26 percent, a difference of 87.26 percent. You can also take a 1 percent floor with a cap at 11 percent.

If you cannot take another year of market volatility, this type of fund may well have a place in your nonqualified plan. Look what happens to your deferred compensation balance in Chart VI with a consistent investment in the S&P 500 index. A make-all-the-difference result of $400,000.

We need to point out that there is no guarantee that future performance will be the same. But there is a guarantee of principal and the protection of a down market.

Chart VI

YearS&P 500

Annualized Returns

Cap / Floor Returns

Annual Investment

S&P(1) Up/Down Side(2)

2000 -9.11% 0.00% 100,000 90,890 100,000 2001 -11.98% 0.00% 100,000 168,021 200,000 2002 -22.27% 0.00% 100,000 208,333 300,000 2003 28.72% 12.00% 100,000 396,886 448,000 2004 10.82% 10.82% 100,000 550,649 607,294 2005 4.79% 4.79% 100,000 681,815 741,173 2006 15.74% 12.00% 100,000 904,873 942,114 2007 5.46% 5.46% 100,000 1,059,739 1,099,013 2008 -37.22% 0.00% 100,000 728,084 1,199,013 2009 27.11% 12.00% 100,000 1,052,578 1,454,895

(1) Account balance if invested based on S&P 500 annualized returns. (2) Account balance if invested based on S&P 500 with a maximum return of 12% and a minimum return of 0%.


Ask Your EmployerIf your sponsoring employer had known to add the S&P Index Fund as an investment option to your fund line-up, you may well have been insulated against rampant volatility this past decade. When properly structured, this plan addition takes advantage of an upside market without all the downside risk.

Securities are offered by Retirement Capital Group Securities, Member FINRA / SiPC. Retirement Capital Group Securities, Inc. is a

wholly owned subsidiary of Retirement Capital Group, Inc.

Investors should consider the investment objectives, risks and charges and expenses of the contract and underlying investment options, risks carefully before investing, The prospectus contains this and other information about the investment company and must

precede or accompany this material. Please be sure to read it carefully.

The opinions, estimates, charts and/or projections contained hereafter are as of the date of this presentation/material(s) and may be subject to change without notice. RCG endeavors to ensure that the contents have been compiled or derived from sources RCG

believes to be reliable and contain information and opinions that RCG believes to be accurate and complete. However, RCG makes no representation or warranty, expressed or implied, in respect thereof, takes no responsibility for any errors and omissions contained

therein and accepts no liability whatsoever for any loss arising from any use of, or reliance on, this presentation/material(s) or it contents. Information may be available to RCG or its affiliates that are not reflected in its presentation/material(s). Nothing contained in this presentation constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any investment product. Investing entails the risk of loss of principal and the investor alone assumes the sole responsibility of evaluating the merits and risks associated

with investing or making any investment decisions.

This report contains proprietary and confidential information belonging to RCG (www.retirementcapital.com). Acceptance of this report constitutes acknowledgement of the confidential nature of the information contained within.

William L. MacDonald, Registered Representative - California Insurance License #0556980

About the AuthorWilliam L. MacDonald founded Retirement Capital Group, Inc. (RCG) in San Diego in 2003, where he serves as Chief Executive Officer, and Chairman of the Company’s Board of Directors. He also founded Compensation Resource Group (CRG) in 1978. CRG was acquired by a NYSE company in 2000; Mr. MacDonald then presided as President and Chief Executive Officer of the executive benefits division until 2003.

Mr. MacDonald has consulted on executive compensation and benefit issues for more than 20 years for numerous public and privately-held firms across a variety of industries, including a large number of Fortune 500 companies. He wrote a book Retain Key Executives published by CCH, and has authored numerous articles on the subject of executive compensation and benefits. In addition, Mr. MacDonald has been quoted frequently in The Wall Street Journal, The New York Times, and Bloomberg, as well as in a number of industry trade journals.

A frequent lecturer, Mr. MacDonald has spoken on the subject of compensation and benefit planning to various organizations, including The Conference Board, World-at-Work, Forbes CEO Forum, and the Young Presidents’ Organization.

Mr. MacDonald serves on the Board of Directors for the San Gabriel Boy Scouts of America, National Association of Corporate Directors, and the Board of Visitors for the Graziadio School of Business at Pepperdine University . He is also a member of the World Presidents’ Organization, San Diego Harvard Alumni Club, Chief Executives Organization (CEO), and Financial Executives International.

Lastly, Mr. MacDonald graduated from Northeastern University, and The President’s Program on Leadership from Harvard Business School.


Most executives are familiar with the basic concept of risk management. Risks that may seem to be relatively slight when viewed from the perspective of a single individual over a short time frame become virtual certainties when considered in larger groups over extended time periods. The more significant and unpredictable, the more important it can be to “hedge” against loss and incur a

relatively small, budgeted annual expense to protect against the “big hit.” Liability insurance or workers compensation are classic examples of this type of business risk management.

These same principles of risk management should be applied to a company’s executive compensation plan. An executive compensation program is arguably the most important obligation a business has, both in terms of expense and in terms of the successful execution of a company’s business plan. Through the compensation program, the executive and the company have entered into a contract with their key performers. If each party meets their obligation, there will be financial rewards in accordance with the terms of the plan. But what if the executive dies or becomes disabled? What becomes of the contract then? What is the impact on both parties? Outside of business failure, the greatest threat to the successful realization of the goals of the executive compensation program is death or disability.

The Relative Risk of Death vs. Disability The risk of death is generally well understood. For a white collar executive, there is a 20.4% chance that a 45 year old executive will die before age 65. Most executives would not think of leaving their family’s financial well-being exposed to risk of that magnitude. Some form of life insurance is routinely an element of the executive compensation program.


Unfortunately, the disability risk as it relates to executive compensation planning is not well understood. By way of contrast, the risk of disability, compared to the risk of death for the same person before age 65 is 26.3 percent! The reality is that while death is inevitable the risk of disability is greater at any point in time. And the disability risk doesn’t stop at 65—after retirement the risk of disability skyrockets. There is a 60 percent chance that a person over 65 will need long-term care in their lifetime. The significance of the disability exposure and the importance of hedging a compensation plan against it are best understood by examining the nature of executive compensation plans.

Relating the Disability Risk to Executive Compensation Plans Executive compensation plans are designed to attract, retain and motivate key talent. These plans are comprised of a package of compensation elements related to the production of current income and the accumulation of assets. These elements are:

¾¾ Salary (current income)

¾¾ Short and long-term incentives (both current income and accumulating assets)

¾¾ Retirement programs (accumulating assets)

¾¾ Benefits (protecting income and assets)

¾¾ Perks (motivation)

The disabilities that are of greatest concern to a compensation plan are those that last longer than a year. The reason for this is simple: most companies will terminate a disabled executive who has been disabled for a year (I suggest that you test that assumption with your own HR department). Statistics indicate that over 54% of executives disabled more than a year are still disabled five years later. Let’s examine the effect of a longer term disability on each of these elements:

Salary: Most executives participate in the company group LTD program. These plans have caps and limitations. The result is that most executive salaries are under-insured.

Short and Long-Term Incentives: Group LTD plans generally do not cover incentive income at all. When incentives are factored into total income, the level of protection afforded by group LTD plans leaves most executive incomes significantly under-insured.

Retirement Plans: Traditional Retirement plans, supplemental retirement plans, deferred compensation plans, and 401(k) plans all play an increasingly important role in executive compensation as the executive enters their prime earning years. Retirement plans usually provide vesting of accrued savings. But that’s it. New contributions stop. Making voluntary contributions to savings once one is disabled becomes difficult if not impossible, especially if income is drastically cut. It is important to realize that expenses go up, not down for the disabled.

Perks: Perks come to an end with the disability. Realistically, the loss of perks is the least of the executives concerns when disabled.


Impact of a Disability on Total IncomeThe following chart illustrates the potential financial impact of a long-term disability prior to retirement, under three distinct, but not uncommon, income scenarios. Executive one is a senior manager with a relatively high base salary but with a significant portion of income derived from incentives. Executive two’s income is predominately base salary with a 25% bonus. Executive three is a personal producer, with a smaller salary with a high percentage of income derived from sales or investment results.

Current Plan (60% Income Replaced; $6,000/Monthly Benefit Maximum)

Executive 1 Executive 2 Executive 3 Annual Salary 250,000 150,000 75,000 Incentive Income 100,000 37,500 100,000Total Income 350,000 187,500 175,000 Monthly LTD 6,000 6,000 3,750

Income Replacement Ratio 21% 38% 26%

What these executives have in common is the fact that the company provided group disability program is woefully inadequate to protect their income. The fault does not rest with the group disability plan. These plans are designed to protect the vast majority of employees at an affordable rate for the company. However, while these plans provide a base of protection for the more highly compensated, it is clear that maintaining an executive’s family’s lifestyle would be difficult, if not impossible, with a loss of income of this magnitude.

Loss of Retirement SavingsLoss of income is only part of the picture. The impact of disability before retirement on the executive’s retirement plan can be severe as illustrated in the following example. The example on the following page assumes that the executive is participating in a supplemental retirement program with a target accumulation of $1,000,000 by age 65. The program is based on annual accruals to hit the target. If the executive becomes disabled, the accruals typically stop.

Retirement Disability Example

Age Target Retirement Annual Accrual Balance Retirement if disabled (6% earnings)

45 1,000,000 27,675 88,757 50 1,000,000 193,857 464,590 55 1,000,000 418,012 748,600 60 1,000,000 720,363 964,008

Advances in medical science make survival from sickness or accidents ever more likely. However, survival does not necessarily translate into returning to a job from which one was terminated or acquiring another equivalent position. The impact of the disability on retirement assets may be permanent.

Hedging an Executive Compensation Program Against Disability Before Retirement This exposure can be corrected by “hedging” the executive compensation plan against the threat of pre-retirement disability.

Hedging the Income RiskOn the income protection side, the most common approach is to purchase individual disability insurance on top of an existing group LTD plan. The supplemental policy covers both base salary and incentive income. In the example below, the individual supplement combines with the existing group LTD to increase the TOTAL income


replacement up to 67%. In the illustration, there is an added catastrophic benefit that is an added feature of many executive supplemental disability policies. This benefit pays an additional sum if an individual is severely disabled. About 10% of disabilities meet this definition. The catastrophic benefit pays added benefits that can bring the total income replacement to 100%.

Enhanced Plan (Total Income Replacement to 67%) Executive 1 Executive 2 Executive 3

Annual Salary $250,000 $150,000 $75,000 Incentive Income $100,000 $37,500 $100,000

Total Income $350,000 $187,500 $175,000

Monthly LTD $6,000 $6,000 $3,750 Individual Supplement $13,500 $4,500 $6,000 Monthly Total Benefit $19,500 $10,500 $9,750 Combined Inc. Repl. Ratio 67% 67% 67% Catastrophic Benefit $9,700 $5,200 $4,900 Monthly Total Benefit $29,200 $15,700 $14,650 Catastrophic Disability Replacement Ratio 100% 100% 100%

These kinds of policies can be non-cancellable with guaranteed rates (fully portable), term policies (owned by the individual or the company), or a combination of both, depending on the situation and amount of coverage needed. Depending on the number of lives being insured, guaranteed issue underwriting is available. The cost will vary by age and the type of coverage selected, however, you can estimate that the cost of coverage will be less than 2% of the income being protected. Premiums paid by the company are tax deductible (and not imputed income to the executive) so the net cost is diminished further.

Hedging the Retirement Risk The approach to hedging retirement risk is similar to protecting income in the sense that dollars are needed in the event of a long-term disability. Hedging the retirement risk is based on the concept of providing enough dollars to complete the targeted plan. One approach is to provide a decreasing term policy that is programmed to provide a lump sum benefit if the executive is totally disabled and terminated from employment. Decreasing term coverage is most appropriate for the simple reason that the exposure diminishes as retirement approaches.

Retirement Disability Solution

Age Annual Accrual Balance Liability “True Up” (Insurance Coverage) Target Retirement

45 27,675 282,049 1,000,000 50 193,857 223,915 1,000,000 55 418,012 145,500 1,000,000 60 720,363 39,730 1,000,000

In the above example, the insured amount should approximate the amount of currently invested dollars with an appropriate earnings assumption that would produce the targeted benefit at the normal retirement age. Because the coverage is term, the expected cost of hedging this aspect of the compensation program would be expected to be less than 1% of the amount at risk.


Long-Term Care: The Overlooked Component of Executive Retirement Programs Long-term care is commonly (and mistakenly) thought of by many as a topic for retirees. Nothing could be further from the truth. Long-term care is by far the single largest unfunded liability that an executive will face in retirement. It is not covered by health insurance or regular disability insurance. Government programs are intended for indigents so it is highly unlikely that an executive will ever qualify for government assistance. As a result, the choices are self-insurance or putting a long-term care plan in place.

The high cost of long-term care and the high likelihood of needing it make long-term care a prime candidate for risk management. The best time to put coverage in place is during your working prime, when premiums are affordable and by far the best way to get coverage is through an employer sponsored program.

The Likelihood of Needing Long-Term Care An individual qualifies for long-term care if they are unable to do certain “activities of daily living” such as bathing, dressing, etc. without stand by assistance. This standard is significant, because it is not necessary to be in a nursing home to qualify. In fact, most long-term care benefits are paid for home care and assisted living. The nursing home is just the end game.

Almost two thirds of individuals over age 65 will need some form of long-term care in their lifetime. There is a 70% chance for married individuals that at least one of them will go to a nursing home. From a risk management perspective, it’s difficult to imagine a greater risk to the financial well-being of a household, including death.

The Cost of Long-Term Care The national average cost of a private nursing home room is now over $73,000 a year and climbing steadily. Assisted living and home care generally cost about half that amount, still a considerable sum. As mentioned above, the executive (unlike many rank and file employees) is highly unlikely to qualify for government benefits. It is not difficult therefore to imagine the impact on a family’s resources of one or even two uninsured long-term care events. Because of the high likelihood of occurrence and high cost, protecting retirement assets against the cost of long-term care is an essential part of retirement planning.

Advantages of Hedging the Long-Term Care Risk Through an Executive Compensation Program Employer-paid long-term care programs have numerous features that make them ideally suited for executive compensation programs:

¾¾ Programs are non-qualified, which means the company can choose who participates and can establish different classes

¾¾ Premiums are tax deductible to the company

¾¾ Premiums are not imputed income to the executive

¾¾ Benefits generally are received tax free

¾¾ Substantial discounts are available

¾¾ Simplified issue underwriting


The net cost to the company of providing the benefit to the executive as opposed to the executive purchasing the coverage on their own (assuming the executive could even medically qualify for coverage on their own) is dramatic:

The following is a cost comparison of an employer-paid executive program with a nationally recognized LTC carrier and the same program purchased by an individual. The program is for a $170/day benefit payable for a minimum of five years with unused benefits extending the benefit period. Both programs have a 5% compound inflation protection rider built in.

Employer-sponsored plan: Year Age Annual Premium Daily Benefit 2010 50 $1,946 170

At Age 65 $1,946 350

At Age 85 $1,946 940

Net after tax cost to employer assuming 35% tax rate: $1,265

Individually purchased plan: Year Age Annual Premium Daily Benefit 2010 50 $2,626 170

Individual purchase at retirement: Year Age Annual Premium Daily Benefit 2025 65 $8,557 350

Timing is Especially Important for Executive Long-Term Care Programs The easiest way to illustrate the importance of establishing an employer sponsored executive long-term care program in a timely manner is to compare the above cost at retirement of a company-sponsored program to what it would cost the executive to make his or her own arrangements at retirement.

Relative Cost to the Executive of Long Term Care At Retirement

• 50 year old OH resident/$170 day benefit/100 day elimination/5% compound inflator/5 yr benefit period/15% employer discount/30% spousal discount/Monthly home care included/Enhanced Home Health Care/Lifetime premium payment

• 65 year old OH resident/$350 day benefit/100 day elimination/5% compound inflator/5 yr benefit period/No employer Discount/15% spousal discount/Monthly home care included/Enhanced Home Health Care/Lifetime premium payment


As already mentioned, employer-sponsored programs provide substantial discounts in addition to enhanced underwriting. Another important aspect of long-term care insurance is the operation of the inflation protection riders. These riders increase the benefit every year without a cap (5% compounding is common), while the premium stays level.

The practical effect of this is that at retirement, when the executive takes over responsibility for premium payments, they have a discounted policy with a substantially increased benefit as compared to what they could purchase on their own.

In our example, the total cost to the company of providing this type of benefit after tax is $18,975. The benefit the executive receives in our example is worth up to $638,750, an amount that will increase by 5% compounded every year thereafter. By any measure, long-term care is a highly leveraged benefit.

Summary Risk management is the process of identifying risks that have a high a likelihood of occurrence. It is based on the realization that it’s not whether a loss will occur, but rather when and to whom the loss will occur. Therefore, in anticipation of the inevitable hit, a company absorbs a regular budgeted expense to hedge against the risk.

This exact logic applies to an executive compensation program. Executives need protection against disability both before and after retirement. The simple fact is that they cannot get the same protection on their own compared to what they can acquire through a company plan. The cost of hedging the compensation plan against these risks is small when compared to the amount at risk. In our view, the case for hedging executive compensation plans against the disability risk becomes compelling.

Charles Lanigan is not associated with the Broker/Dealer, Retirement Capital Group Securities, a wholly-owned subsidiary of

Retirement Capital Group, Inc. Investors should consider the investment objectives, risks and charges and expenses of the contract and underlying investment options, risks carefully before investing, The prospectus contains this and other information about the

investment company and must precede or accompany this material. Please be sure to read it carefully.

The opinions, estimates, charts and/or projections contained hereafter are as of the date of this presentation/material(s) and may be subject to change without notice. RCG endeavors to ensure that the contents have been compiled or derived from sources RCG

believes to be reliable and contain information and opinions that RCG believes to be accurate and complete. However, RCG makes no representation or warranty, expressed or implied, in respect thereof, takes no responsibility for any errors and omissions contained

therein and accepts no liability whatsoever for any loss arising from any use of, or reliance on, this presentation/material(s) or it contents. Information may be available to RCG or its affiliates that are not reflected in its presentation/material(s). Nothing contained in this presentation constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any investment product. Investing entails the risk of loss of principal and the investor alone assumes the sole responsibility of evaluating the merits and risks associated

with investing or making any investment decisions.

This report contains proprietary and confidential information belonging to RCG (www.retirementcapital.com). Acceptance of this report constitutes acknowledgement of the confidential nature of the information contained within.


“If you build it, they will come,” declares the unforgettable line in Kevin Costner’s accolade to baseball, Field of Dreams. In the search for executive talent, the same principle applies. Right? Offer a homerun salary, a lucrative benefits package, an exciting work environment, long-term incentives, and the best performers will wander out from the cornfields, ready to sign employment contracts. Hmmm. Not quite.

When small businesses go up against major corporations to compete for talent, the differences are as striking as farm leagues to the majors. And right now, all of corporate America needs a world series.

The latest statistics from the Office of Advocacy lists 29.6 million small businesses in the United States as of 2008. For research purposes, a small business is defined as an independent business with fewer than 500 employees. The majority of these businesses are structured as limited liability corporations (LLCs), limited liability partnerships (LLPs) and Sub Chapter S corporations (S-corps). And the law outright restricts what these corporate structures can do to attract and keep much-needed executive talent.


In this article, we will share why an uneven playing field exists between small business and their larger brethren and what we can do about it. First, let’s ask why should we care about small businesses? It’s in the numbers. Consider these amazing facts.

¾ American small businesses:

¾ Represent 99.7 percent of all employer firms

¾ Employ over half of all private sector employees

¾ Pay 44 percent of total U.S. private payroll

¾ Generate 64 percent of net new jobs over the past 15 years

¾ Create more than half of the nonfarm private gross domestic product (GDP)

¾ Hire 40 percent of high tech workers (scientists, engineers, and computer programmers)

¾ Reside as 52 percent of home-based businesses and 2 percent of franchises

¾ Comprise 97.3 percent of all identified exporters

¾ Produce 30.2 percent of the known export value in FY 2007

¾ Produce 13 times more patents per employee than large patenting firms

Source of Facts: U.S. Dept. of Commerce, Bureau of the Census and International Trade Admin.; Advocacy-funded research by Kathryn Kobe, 2007 (www.sba.gov/advo/research/rs299tot.pdf) and CHI Research, 2003 (www.sba.gov/advo/research/rs225tot.pdf); U.S. Dept. of Labor, Bureau of Labor Statistics.

I wish every politician, bureaucrat or regulator took five minutes to honestly internalize this data. How important is small business to the U.S. economy? Like Babe Ruth to baseball.

Move Over Big BoysOver decades of frontline experience, we have seen how private companies and closely held or family-owned businesses are seriously challenged in their quest to find and hold onto key management personnel. That’s because executive talent is often lured away by publicly held companies that offer company stock (equity) as a key component of total compensation packages. While equity in a private company cannot be traded on a stock exchange—and may not otherwise be marketable—there is a way up for private companies to provide long-term equity incentives.


What if a business owner could offer long-term, equity-type incentives to employees without ceding control?

The way up, however, involves the rocky issue of control. Typically, a business owner or private company employer is opposed to giving up control over the business, let alone cut loose equity. Accountability to minority shareholders undermines the very freedom they sought as entrepreneurs. Or so they think.

Most publicly held companies are free to access four primary compensation elements: salary, annual bonus, long-term incentives and equity compensation such as stock options or restricted stock awards. [See Chart I] Many times the long term-incentive is the equity in the company.

For private companies, though, the fourth element—equity compensation—is off the table, locking them out from snagging talent when the time is right.

Chart I

Many private companies use forms of nonqualified deferred compensation plans to fill this void, and structure the plan with incentives built around the long-term goals of the company [right side of Chart I]. These plans usually have some type of employer contribution, based on the key indicators set by the company such as revenue growth, after-tax profits, cash flow or others. The key employee is tied to the company with a vesting plan, and the company funds the plan with life insurance or other assets, so it minimizes cost over time.

Because most private companies and professional firms use much different corporate tax structures than the Fortune 500, many of these strategies do not make good economic sense.

Pay For Performance—Deferred CompensationDeferred compensation as a method to reward performance aligns the interest of key talent with shareholders. And, these plans are the most benign of all compensation methodologies. In a deferred compensation arrangement, key people are offered the option of deferring “their own compensation”; that is to say, they do not receive their “own money” until some future date, often at or near retirement. The monies deferred go into the company’s coffers and are subject to the claims of creditors should the company fail. Because they do not receive the money deferred, executives are not taxed on these amounts until they withdraw.


A deferred compensation arrangement parallels a 401(k) plan on many levels, except there is no guarantee the money will exist when payout is due. What’s more risky than that? These plans are not formally funded like the company’s 401(k); they are informally funded, which means the assets are subject to creditor claims against the company. On top of the risk the employee bears, the company does not receive a current tax deduction for any money deferred or any contribution made on behalf of the key employee. This situation is the real rub for the closely held business with a pass-through tax structure.

Tax Leverage of Deferred CompensationBefore we discuss an alternative for the pass-through tax structure, let’s understand why Fortune 500 companies use deferred compensation and why they remain popular with key executives.

Tax leverage is the most important attribute of nonqualified deferred compensation (NQDC) plans for Fortune 500 companies. They generate substantial leverage by combining non-taxable insurance proceeds, non-taxable accumulation of policy cash values and, finally, tax deductibility on payment of benefits. This leverage enables the employer to provide substantial benefits to key employees at little or no cost.

To ensure clarity, let me explain how life insurance produces tax leverage. When an employer uses cash value life insurance to informally fund a NQDC plan, three income tax questions emerge:

1. Are the premiums paid by the employer tax deductible? No.

2. Are benefit payments, when paid by the employer to the employee, tax deductible? Yes.

3. Are life insurance death proceeds paid to the employer (the beneficiary) income tax free? Yes.

It is an appealing outcome: The employee tax defers money; the employer uses the policy to create tax leverage. Fortune 500 companies embrace this concept because they have less concern with tax deductions in the present (premiums and amounts defer are not tax deductible); they sit on a lot of cash to fund these arrangements and can wait several years to reap the non-taxable life insurance benefits. The closely held business or professional firm does not have the luxury of time and the 20, 30 or 40 year window required to make tax leverage work.

Pass-Throughs Can’t WaitChart II below illustrates the situation with a 45-year old employee who defers $100,000 for 7 years, then takes out retirement benefits at age 65 for 15 years. We assume life expectancy to age 82 (when non-taxable life insurance benefits revert to the company). Clearly, the company ties up a lot of cash for 37 long years (assuming the employee lives to 82) before it recaptures its cost. This outcome does not work for most pass-through entities we work with.


Chart IISample Company

Deferred Compensation PlanCOLI Cash Flow

PlanYear Premium Mortality

Proceeds

Net Cash Net Cash Net Cash FlowFlow From Flow From

Annual CumulativeInsurance Benefits

(1) (2) (1)+(2) = (3) Benefits Cash Flow = (4) (3)+(4) = (5) (6) 1 (100,000) 0 (100,000) 60,000 (40,000) (40,000)2 (100,000) 0 (100,000) 60,000 (40,000) (80,000)3 (100,000) 0 (100,000) 60,000 (40,000) (120,000)4 (100,000) 0 (100,000) 60,000 (40,000) (160,000)5 (100,000) 0 (100,000) 60,000 (40,000) (200,000)

10 0 0 0 0 0 (280,000)15 0 0 0 0 0 (280,000)20 0 0 0 0 0 (280,000)25 0 0 0 (137,385) (137,385) (966,925)30 0 0 0 (137,385) (137,385) (1,653,850)35 0 0 0 (137,385) (137,385) (2,340,775)37 0 6,324,631 6,324,631 0 6,324,631 3,983,856

Total (700,000) 6,324,631 5,624,631 (1,640,775) Present Value @ 4.2% 817,310 (316,862) 500,447 Assumptions: 40% tax rate, 7% pre-tax cost of money, 4.2% after tax


Fortune 500 Find Value in COLIOne may question, why do Fortune 500 companies fund executive benefits with life insurance, referred to as corporate-owned life insurance or COLI. To large companies, cash flow is not as important as earnings per share. COLI enhances the Profit and Loss statements of Fortune 500 companies, which also insure larger populations compared to small business. As so many executives pass on at different times, cost recapture is staggered and less of a hardship for larger companies. Finally, at much higher corporate tax rates, larger companies often prefer COLI assets to taxable assets like mutual funds.

Deferred Compensation in the Private OrganizationLet’s explore an alternative that works for both the key employee and his employer—one that could be tax deductible to the firm today, and grow tax deferred to the individual without the risk of general creditor status. In this comparison, our first executive, Frank Jones, 45, works for fictitious Apex Corporation, an $8 billion dollar market cap NYSE-traded firm. He plans to retire at 65, as long as he can provide for his children, Frank Jr., 14, and Amy, 12.

Our second executive is Bob Carter, also 45, who works for a mid-size organization that competes in the same industry as Apex. Bob is also married with two children, Bob Jr. and Sara, ages 8 and 10. Both men are doing well financially, and would like to accumulate money in a tax-effective manner. Naturally, they both want to save for retirement, as long as they can access it if a short-term financial need arises. Both companies offer wealth accumulation plans, albeit different in structure.

Three Phases of Retirement PlanningIn our discovery process with clients, we first define the necessary phases for accumulating dollars for retirement (Chart III).

Chart III

Phase One—Contribution

During the contribution phase, executives or employees face two central decisions: 1) how much to contribute; 2) whether the contributions made are pre-tax, after-tax, or a combination of both. Conventional wisdom dictates that pre-tax investments are better, but this is not always the case.

By example, real estate investments are made with after-tax dollars, but the appreciation is not taxed until the property is sold, then taxed at capital gains, the lower rate. Ask yourself, is it the tax-deferred accumulation and the capital gains tax which made real estate a good investment, not the pre-tax or after tax contribution? If you accept the adage, “a penny saved is a penny earned,” it serves to accept that how the penny is saved is probably more important than the act of saving itself.

Contribution Distribution Accumulation


Phase Two—Accumulation

An employee’s retirement lifestyle is directly dependent on the rate earned on savings during the accumulation phase. This return on investment is directly affected by Modern Portfolio Theory (or Portfolio Management Theory) which subscribes to diversification. Diversification is why individuals invest in mutual funds – it minimizes risk. Finally, it is critical to take full advantage of compounding money tax-deferred during the accumulation phase because it is the centerpiece of a smart investment strategy.

Phase Three—Distribution

Planning now for maximum flexibility in distribution is integral to retirement security, even though the distribution phase could rest far in the future. Distribution funds take shape in one of three categories [See Chart III]. How you obtain your money at retirement may have greater impact than how you saved it in the first place. Taking distribution under capital gains is the key.

Pre-tax deferrals could have a negative impact on your retirement income, especially if they are taxed as regular income at distribution. Diversification in how funds are accessed during the distribution phase is equally important to diversification in the allocation of funds during your accumulation phase. Keep in mind, many feel that some portion of your investments should be designed to provide a hedge against higher tax rates.

Tax UnknownsSince no one can accurately predict future tax rates, accumulated wealth should not be dependent on any single asset or assumption. An increase in the top tax rate from 35 percent to 52.5 percent will cut your distribution assumptions by roughly 25 percent. You do not want to confront this reality at retirement age and be forced to reduce your distributions.

For further information, look at the history of U.S. Top Income Rates [Chart IV] and consider 2010 and 2011.

Chart IV


Large Company SolutionFrank’s employer offers him a “pre-tax” NQDC plan as part of his total compensation package; it is designed with ample flexibility to help him meet lifetime goals including children’s college funds and his retirement. Frank’s plan allows him to defer up to 80 percent of his salary and 100 percent of his bonus.

IRC Code Section 409A requires him to make his salary deferral election before the calendar year begins. Fortunately, he can wait until six months prior to the end of the plan’s performance period to designate his bonus money, which in his case is June.

When making his election to defer, Frank has an opportunity through a unique design feature in his plan to set up different “buckets” to stipulate when and how he prefers to take distribution. To meet his personal goals, Frank decides to defer $50,000 per year until he retires, and he elects to take his retirement payment in a lump sum. This election is

common. These plans are subject to the claims of the company’s creditors and Frank has no way of knowing who will run the company down the road.

Chart V below shows Frank’s tax-deferred accumulation, and assumes a 7 percent return on the mutual fund investments the company made available in the plan.

Chart V

In our calculation, Frank receives an after-tax lump sum payment at retirement of $1,315,955 (assuming a 40% tax rate). If tax rates are 50%, his payment is reduced to $1,096,629. Now he must invest those dollars to meet his retirement objectives. We assume he could still earn the 7% investment (same type mutual fund returns), but now that he personally holds the assets he must pay income tax on the gains in the funds.

Assuming capital gains at 20%, dividend income at 39.6% and ordinary income at 39.6% (31.76 blended tax rate), his cash balance of $1,315,955 will produce $114,654 for 15 years. We also withheld the 3.8% Medicare tax on investment income, required as of 2013. Once Frank takes distribution of his deferred compensation plan at retirement, he is no longer subject to the claims of creditors on his retirement income.

Age Annual Deferral

7% Earnings

Account Value

45 $50,000 $3,500 $53,50046 $50,000 $7,245 $110,74547 $50,000 $11,252 $171,99748 $50,000 $15,540 $237,53749 $50,000 $20,128 $307,66550 $50,000 $25,037 $382,70151 $50,000 $30,289 $462,99052 $50,000 $35,909 $548,89953 $50,000 $41,923 $640,82254 $50,000 $48,358 $739,18055 $50,000 $55,243 $844,42356 $50,000 $62,610 $957,03257 $50,000 $70,492 $1,077,52458 $50,000 $78,927 $1,206,45159 $50,000 $87,952 $1,344,40360 $50,000 $97,608 $1,492,01161 $50,000 $107,941 $1,649,95262 $50,000 $118,997 $1,818,94863 $50,000 $130,826 $1,999,77564 $50,000 $143,484 $2,193,259


Homerun for Smaller Companies—The MSP®

Remember Bob Carter, our smaller company executive? Bob’s company looked at the same plan design as Frank’s employer and decided instead to use a concept called the Management Security Plan (MSP) a custom-designed solution to provide life insurance and wealth accumulation for retirement. As a limited liability corporation (LLC), Bob’s company knew it needed a current tax deduction, but did not want to subject employees to general creditor status.

The MSP allowed deferrals of up to 80 percent of salary and 100 percent of bonus. Also, Bob could wait to make his final election until the day he received his bonus, and respond to real-time circumstances. As a result, he deferred $50,000 of his bonus, which ran through payroll, and netted $30,000, his after-tax premium payment to the MSP.

Because premium payments were made with after-tax dollars, it was essential to focus on the accumulation and distribution phases and maximize plan value. Bob’s $30,000 premium payment was made to a trust that also provided all participants with ERISA protection. The trust then purchased a life insurance policy with the full $30,000 invested in the policy, which carried a death benefit with his wife as beneficiary. The policy also allowed Bob to select from a number of investments.

Special RiderTo further energize the accumulation phase, the MSP policy featured an alternative loan rider that “loaned” the account the amount paid in taxes ($20,000) so the entire $50,000 – Bob’s pre-tax amount – is invested. This allowed Bob and all participants to create the power of the pretax contributions [Chart VI].

Chart VI

1. Assumed 40% tax rate.2. Loan and source of loan is optional. If chosen, policy loan is non-recourse.Note: If the alternative loan rider is used, the policy loan plus accrued interest is simply deducted from the death benefit

assuming the policy is held until death.

The alternative loan rider is a non-recourse “policy loan,” however, assuming the policy is held until maturity, Bob does not pay it back until his death; it is simply deducted from the policy’s death benefit upon his death. The policy’s loan interest rate is an indexed 90-day LIBOR + 1.5 percent (1.96% percent on July 2010).

This rider elevates Bob to a level playing field with Frank during the accumulation period with his $50,000, the pre-tax investment. However, Bob paid his tax up front and he can withdraw all of the earnings through a policy loan – without paying tax. The MSP is structured as an after-tax plan to give participants the freedom to withdraw cash from policies.


Out-of-the-Park ResultsNotice in Chart VII how Bob’s account balance grows (assuming the same 7% return as Frank) tax-deferred. If he elects the same 15-year distribution as Frank, Bob ends up with more money, not subject to taxation. What’s more, he still has a life insurance benefit.

Chart VII

Notes: This hypothetical illustration is based on the assumptions presented and shows how the performance of underlying accounts could affect a policy’s cash value and death benefits and should not be used to predict or project investment results. Loans and withdrawals reduce available cash value and reduce the death benefit or cause the policy to lapse. Actual returns may vary. Variable Universal Life Insurance is available by prospectus only.

Sample Age 45 - 20 PayRetirement Age: 65ALR Interest Rate: 40.0% Crediting Rate - 7% Net Crediting Rate - 0% NetALR Percentage 4.0%

Without ALR With ALR Without ALR With ALR

Year AgeCash

PremiumALR

PremiumTotal

Premium

Cash Surrender

ValueNet Death

Benefit Distribution

Cash Surrender

ValueNet Death

Benefit Distribution

Cash Surrender

ValueNet Death

Benefit

Cash Surrender

ValueNet Death

Benefit1 45 30,000 20,000 50,000 32,100 625,079 0 32,700 1,020,160 0 31,688 625,079 32,061 1,020,9972 46 30,000 20,000 50,000 66,447 625,079 0 68,308 998,500 0 62,756 625,079 62,252 999,3603 47 30,000 20,000 50,000 103,198 625,079 0 107,063 975,963 0 94,257 625,079 92,305 976,8634 48 30,000 20,000 50,000 141,190 625,079 0 146,986 952,530 0 122,008 625,079 115,208 953,4665 49 30,000 20,000 50,000 179,199 625,079 0 186,286 928,144 0 147,954 625,079 134,165 929,1326 50 30,000 20,000 50,000 218,688 625,213 0 226,850 904,055 0 173,872 625,079 152,088 903,8117 51 30,000 20,000 50,000 259,616 718,565 0 268,814 1,033,432 0 198,661 625,079 167,131 877,4928 52 30,000 20,000 50,000 299,917 1,163,100 0 308,184 1,746,873 0 222,259 625,079 182,744 853,7259 53 30,000 20,000 50,000 341,538 1,163,100 0 349,670 1,718,335 0 246,045 1,037,295 199,191 1,518,50810 54 30,000 20,000 50,000 392,086 1,163,100 0 404,372 1,688,709 0 268,841 1,037,295 215,033 1,496,31311 55 30,000 20,000 50,000 446,275 1,163,100 0 463,989 1,657,845 0 291,089 1,037,295 230,319 1,474,47412 56 30,000 20,000 50,000 503,867 1,191,682 0 528,051 1,674,307 0 315,968 1,037,295 249,952 1,452,59613 57 30,000 20,000 50,000 564,644 1,295,905 0 596,143 1,814,787 0 340,466 1,037,295 269,268 1,431,03814 58 30,000 20,000 50,000 629,269 1,402,179 0 669,281 1,957,434 0 364,661 1,037,295 288,370 1,409,77115 59 30,000 20,000 50,000 697,496 1,509,347 0 747,083 2,100,104 0 388,686 1,037,295 307,509 1,388,82516 60 30,000 20,000 50,000 769,178 1,848,664 0 829,214 2,628,041 0 412,448 1,037,295 326,331 1,368,00017 61 30,000 20,000 50,000 845,394 1,848,664 0 917,412 2,588,961 0 435,868 1,037,295 344,816 1,347,40918 62 30,000 20,000 50,000 926,943 1,848,664 0 1,012,890 2,548,433 0 458,863 1,037,295 362,850 1,327,07619 63 30,000 20,000 50,000 1,013,110 1,957,992 0 1,114,504 2,689,234 0 481,969 1,037,295 381,489 1,307,16020 64 30,000 20,000 50,000 1,103,690 2,075,050 0 1,221,793 2,842,162 0 504,804 1,037,295 399,561 1,287,13221 65 0 0 0 1,069,283 2,038,303 95,838 1,180,030 2,797,757 121,056 499,907 925,481 373,728 1,083,74222 66 0 0 0 1,031,389 2,005,059 95,838 1,134,387 2,758,360 121,056 494,714 925,481 346,642 1,065,27423 67 0 0 0 991,841 1,729,000 95,838 1,086,131 2,410,330 121,056 489,221 925,481 318,367 1,046,12024 68 0 0 0 949,791 1,615,515 95,838 1,034,989 2,267,403 121,056 483,442 925,481 288,850 1,026,19925 69 0 0 0 905,192 1,503,047 95,838 980,940 2,125,151 121,056 477,395 925,481 258,090 1,005,48126 70 0 0 0 858,958 1,405,997 95,838 926,244 1,987,375 121,056 470,928 925,481 225,741 983,87527 71 0 0 0 809,599 1,324,732 95,838 868,906 1,850,359 121,056 463,992 925,481 191,804 961,46428 72 0 0 0 756,223 1,264,838 95,838 809,143 1,713,308 121,056 456,600 925,481 156,212 938,15729 73 0 0 0 698,225 1,198,243 95,838 746,105 1,627,040 121,056 448,614 925,481 118,699 913,91830 74 0 0 0 635,343 1,124,880 95,838 678,382 1,548,543 121,056 440,018 925,481 79,128 888,63831 75 0 0 0 567,108 1,044,023 95,838 605,306 1,461,281 121,056 430,799 925,481 37,580 862,41832 76 0 0 0 493,224 955,741 95,838 526,632 1,365,738 121,056 420,804 925,481 -4,913 835,15033 77 0 0 0 413,011 859,250 95,838 441,595 1,260,798 121,056 409,858 925,481 0 034 78 0 0 0 326,102 754,878 95,838 349,965 1,147,585 121,056 397,533 925,481 0 035 79 0 0 0 232,078 643,860 95,838 251,131 1,027,019 121,056 383,599 925,481 0 036 80 0 0 0 230,032 624,581 0 270,676 1,024,359 0 368,163 925,481 0 037 81 0 0 0 227,332 603,554 0 291,821 1,021,569 0 350,647 925,481 0 038 82 0 0 0 224,106 583,057 0 315,296 1,022,745 0 331,068 925,481 0 039 83 0 0 0 220,349 562,213 0 341,191 1,026,035 0 309,209 925,481 0 040 84 0 0 0 216,017 541,331 0 369,711 1,032,451 0 284,417 925,481 0 041 85 0 0 0 210,491 519,494 0 399,673 1,040,099 0 255,969 925,481 0 042 86 0 0 0 203,540 497,089 0 431,007 1,050,319 0 222,865 925,481 0 043 87 0 0 0 195,625 474,059 0 464,704 1,062,850 0 184,349 925,481 0 044 88 0 0 0 186,139 450,248 0 499,907 1,077,914 0 139,719 925,481 0 045 89 0 0 0 175,405 425,793 0 537,655 1,096,167 0 88,277 925,481 0 046 90 0 0 0 163,439 401,206 0 578,579 1,119,456 0 29,066 925,481 0 0

600,000 600,000 600,000 600,0000 0

1,437,565 1,815,836 0 05.02% 6.37% N/ A N/ A

497,089 1,021,569 925,481 06.18% 7.68% 1.33% N/ A

After-tax Participant ContributionsAfter-tax Company Contributions

Non-Taxable Retirement BenefitsAfter Tax IRR on Retirement Benefits

Income Tax Free Death Benefit Age 82After Tax IRR including Death Benefit


If Bob dies at 82, his wife receives $1,021,569 over and above the income he took out for the past 15 years. If the employer wants to make a premium payment to the MSP on behalf of Bob, they can, and structure a vesting schedule to provide some benefits of retention.

Final ThoughtsOn the baseball field, if a smart base runner sees early on that he might grab a double or triple, he runs to first, second and third at a curve, rounding off the corners. Researchers at Williams College have proven through observation and mathematics that this strategy can help a runner round bases 20 percent faster.

How we hit our retirement targets throughout our careers determine outcomes, as well. That means risk management of inflation, health care costs, asset allocations and even our mortality, forces that place heavy pressure on nest eggs. But nothing exerts as much risk as the burden of income tax.

The Management Security Plan, a wealth accumulation strategy, generates non-taxable income and removes income tax risk from retirement benefits. Plus, the participant gains a valuable life insurance benefit.

Small business is well-advised to adopt a base runner risk strategy as retirement monies move through all three phases of retirement planning—contribution, accumulation, and distribution. In our experience, the MSP will get you to home base.

Securities are offered by Retirement Capital Group Securities, Member FINRA / SIPC. Retirement Capital Group Securities, Inc. is a wholly owned subsidiary of Retirement Capital Group, Inc.

The opinions, estimates, charts and/or projections contained hereafter are as of the date of this presentation/material(s) and may be subject to change without notice. RCG endeavors to ensure that the contents have been compiled or derived from sources RCG believes to be reliable and contain information and opinions that RCG believes to be accurate and complete. However, RCG makes no representation or warranty, expressed or implied, in respect thereof, takes no responsibility for any errors and omissions contained therein and accepts no liability whatsoever for any loss arising from any use of, or reliance on, this presentation/material(s)

or it contents. Information may be available to RCG or its affiliates that are not reflected in its presentation/material(s). Nothing contained in this presentation constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any investment product. Investing entails the risk of loss of principal and the

investor alone assumes the sole responsibility of evaluating the merits and risks associated with investing or making any investment decisions. Lincoln variable universal life insurance is sold by prospectus only. Carefully consider the investment objectives, risks, and charges and expenses of the policy

and its underlying investment options. This and other important information can be found in the prospectus for variable universal lie policy and the prospectus for the underlying investment options. Prospectuses are available upon request and should be read carefully before investing or sending money.

Lincoln Corporate CommitmentSM Variable Universal Life is issued by The Lincoln National Life Insurance Company (Policy Form LN939 and state variations), Fort Wayne, IN and distributed by Lincoln Financial Distributors, Inc., a broker/dealer and offered by broker/dealers with effective selling agreements.

Not available in New York.

The Lincoln National Life Insurance Company and Lincoln Financial Distributors, Inc. are not affiliated with RCG or any of its subsidiaries or affiliates. The Lincoln National Life Insurance Company is a non-bank lender with the Federal Reserve Board and is solely responsible for its contractual obligations under

the policy and is not responsible for or involved with the Management Security Plan.

Guarantees and death benefits are subject to the claims-paying ability of the underlying insurance company.

This report contains proprietary and confidential information belonging to RCG (www.retirementcapital.com). Acceptance of this report constitutes acknowledgement of the confidential nature of the information contained within. William L. MacDonald, Registered Representative - California Insurance

License #0556980


Chief executive officers, board directors, and compensation committees are suffering from a type of post-traumatic stress. It is compromising the impact of executive compensation to strengthen effective leadership and build shareholder value. This commentary offers a four-step plan to generate creative and viable solutions through the application of thought leadership.

Amid the chorus of executive compensation advice bombarding corporate Directors and CEO’s today, one issue has bubbled to the surface. Is there some semblance of insightful Thought Leadership that will drive the sustainable creation of shareholder wealth? Enough of the second-guessing and lamenting “Main Street’s” anger at CEO pay packages; it’s time to re-focus our energy and talent to provide new pathways to harness executive leadership while enabling profitable revenue growth and the creation of new employment opportunities.


We all know how the 2008 economic meltdown has impacted executive compensation. The clamor and outcry over poor corporate governance has been swift and unyielding. When tarnished Merrill Lynch was gobbled up by Bank of America, the CEO exited with more than $160 million. For what? As Home Depot fell into disrepair, the CEO left, with a record setting $210 million in tow. When did it become mandatory to reward failure?

For the second straight year, CEO pay levels declined in 2009, albeit slightly1. Base salaries were flat at $1,030,000. Overall cash compensation grew by 3.2 percent, but long-term incentives fell by 4.6 percent, bringing total direct compensation down by 0.9 percent. One would think, given all the ink on corporate excess, more drastic measures would have been taken.

With the media and shareholders scrutinizing every aspect of executive compensation, it’s no wonder decision makers charged with executive pay issues are laying low. But that restraint is harmful to American business competitiveness.

With the April Department of Labor report heralding the creation of more than 290,000 new jobs, business leaders have demonstrated they can weather the onslaught of media lambasting, regulatory ‘Monday morning quarterbacking’ and tight credit markets. But, will rigid controls over salary and incentives ultimately stifle creativity and resourcefulness? We hope not. It is imperative that new approaches to attract, motivate, and reward executives are initiated. Clearly, well conceived and executed compensation plans require flexible and creative thought leadership.

Thought leadership takes deeper, more critical thinking than typically found in today’s quick gratification business world. It often requires us to take a bold stance on key issues. Thought leadership works only when it inspires and influences others to think beyond the surface issues. There’s no denying the presence of bright minds in the executive compensation field. But, if they can’t get through to the ultimate decision makers, no amount of thought leadership can change the status quo. The need to penetrate the bureaucracy, the boardroom politics and the rigid mindset has never been greater.

The four-step plan outlined below provides the basis to begin this journey:

1. ExecutiveCompensationPhilosophy—StartwithaCleanSlateUnder the weight of new regulatory compliance and shareholder advocacy ‘guidelines’, it is tempting to settle for a cursory review of current executive compensation philosophy. We urge you to not fall into this trap. Step back. Rethink. Re-examine. Then, develop an intentionally dynamic and clear statement of executive and incentive pay policy that directly reflects the difficult lessons of the last few years:

• Implement only those Pay-for-Performance measures that reliably trigger and reward industry-leading performance. Take great care to understand and balance quantitative and qualitative success drivers and understand how they relate to your industry, business, and talent pool.


• Initiate Say-on-Pay provisions beyond the simple and standard annual Proxy dialogue. Your large institutional investors, activist groups, regulators, executives and employees deserve the quality of thought behind a truly evergreen compensation plan, one that is relevant, topical and reflects the interests of each group.

2. ExecutiveCompensationStrategy—LeadorFollow,ButDefinitelyDoNotGetOutoftheWayWarren Buffet contends that when you apply last year’s 75th percentile executive pay position as the only benchmark, it becomes the defacto median pay for the next year. No wonder executive compensation ratchets up every year.

By contrast, many leading organizations, General Electric for example, pay scant attention to what others pay. Instead, GE determines the appropriate individual executive pay level, based on achieved and sustainable results, which are measured alongside what impact those results create on the business.

It is not wrong to target total compensation—base salary, annual incentive and long-term pay—to the median; rather than the 75th percentile of the applicable executive labor market. It makes sense! At first glance, it appears to follow the pack. However, if a median pay approach is used appropriately, as a broad guideline to deliver robust pay for outstanding results, it enables Directors and CEO’s to act in accordance with the company’s compensation philosophy. Namely, to truly pay for performance; not pay to the market.

Alternatively (and in reaction to the firestorm of paying-for-failure), some companies have been driven to delineate pay strategy by the doctrine that below plan or threshold performance levels means no increase in salary and/or no bonus. This approach may be too black and white for the new realities of business today.

Whichever strategy is chosen, both require proactive and consistent transparency in communications. In our opinion, a passive stance is unacceptable. So many companies bow their heads to avoid unwelcomed media scrutiny. As a result, executive pay languishes as a do-nothing impediment to potential business success. And, the unintended consequence, of course, is failure to appropriately reward and retain key talent and create shareholder value.

3. DesignLTIPlanswithExecutiveAspirationsinMind—“HellNo!WeWantOptions”Develop your long-term incentive plan (LTI) to drive sustainable performance of the executive team. Deploy the right tools and timing for your own unique circumstances. Do not fall victim to LTI du jour.

In a recent RCG engagement with a corporate Board, we questioned the reasoning behind its decision to move away from non-qualified stock options to restricted stock. The directors convinced themselves the move was the best approach for the new LTI program to be presented to shareholders for approval. At the time, greater use of restricted stock was regarded as the so-called trend to adopt. It garnered support from the CFO because of the accounting impact. Additionally, shareholder advisor groups labeled the transition from options to restricted stock as a best practice.


When we canvassed the executive team, as part of our due diligence, we heard a resounding “Hell no! We want options.” The Board had overlooked a critical state of mind in its newly created executive team, which was clearly promoted or recruited on its ability to turn around the business. Overwhelmingly, the team believed they were re-creating and positioning the company for exponential growth.

The management team as a whole wanted the increased leverage that would be more fully recognized through stock options rather a lesser number (but safer bet) of restricted stock units.

4. DoNotPresumeRiskAssessmentRequiresRiskMitigationStrangely, over the past few years, risk assessment of compensation plans (a standard practice for decades) has morphed from a systematic, yearly process by the comp committee into an outright and arbitrary scale-back of executive pay and incentives, both in the C-suite and the organization.

In our experience, Boards, compensation committees and senior management do, in fact, analyze and account for risks inherent in pay actions, and they do so across the spectrum of approved increases and incentive plans, whether annual or long-term; newly adopted or amended.

The impact of these risk decisions weighs heavily on corporate governance in three ways: 1) on the company’s ability to attract and retain key performers; 2) on the opportunity to produce sound operating results and consistent profitability; and 3) ultimately, on shareholder value. Risk is a constant in business. We must account for it, but not react to it in a vacuum, or out of fear.

Few would argue that regulators need to catch up with their legislated roles to better understand, and, therefore, better monitor the complex financial instruments that were, in part, contributors to the global economic distress that began in late 2008. Through the political process, needed controls will inevitably be put in place. But let’s not make a collective misstep of being so overly cautious with respect to our compensation programs that we thwart creativity, innovation and the entrepreneurial spirit that has been our national hallmark.

In conclusion, we feel it is time to harness our skills and stretch our minds to generate a new brand of executive compensation thought leadership. One that resolves the talent gap created by retiring boomers. One that prepares the upcoming generation of top performers to thrive. And, one that brings corporate America back to its coveted role at the forefront of global business.

To those responsible for introducing, mentoring, or delivering on executive compensation thought leadership in your company, whether public or private, we suggest that the evaluation and the adoption of the aforementioned four steps will put you on the road to building shareholder wealth through pay programs that increase productivity and business success through a motivated and engaged executive leadership team.

1 Wall Street Journal/Hay Group 2009 CEO Compensation Study, April 2010


Larry Robinson is not associated with the broker dealer, Retirement Capital Group Securities, a wholly-owned subsidiary of Retirement Capital Group, Inc. Investors should consider the investment objectives, risks and charges and expenses of the contract and underlying investment options, risks carefully before investing, The prospectus contains this and other information about the investment company

and must precede or accompany this material. Please be sure to read it carefully.

The opinions, estimates, charts and/or projections contained hereafter are as of the date of this presentation/material(s) and may be subject to change without notice. RCG endeavors to ensure that the contents have been compiled or derived from sources RCG believes to be reliable and contain information and opinions that RCG believes to be accurate and complete. However, RCG makes no representation or warranty, expressed or implied, in respect thereof, takes no responsibility for any errors and omissions contained therein and accepts no liability whatsoever for any loss arising from any use of, or reliance on, this presentation/material(s) or it contents. Information may

be available to RCG or its affiliates that are not reflected in its presentation/material(s). Nothing contained in this presentation constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any investment product. Investing entails the risk of loss of principal

and the investor alone assumes the sole responsibility of evaluating the merits and risks associated with investing or making any investment decisions.

This report contains proprietary and confidential information belonging to RCG (www.retirementcapital.com). Acceptance of this report

constitutes acknowledgement of the confidential nature of the information contained within.

About the Author:

Lawrence (Larry) Robinson is Principal of RCG|Executive Compensation Group, a nationally recognized executive compensation and benefits leader for more than three decades. Mr. Robinson’s 25-year career covers domestic, international and expatriate compensation expertise in biotech, computer services, consumer goods, financial services, high-tech, oil & gas and the publishing sectors.

As a corporate executive, he has held leadership roles including Vice President - Global Compensation, Benefits and HR Information Systems for a Fortune 500 bio-tech company and Vice President - Global Human Resources Operations for Dell Inc. Prior corporate assignments in compensation include Xerox and Pepsi-Cola International following his initial training at General Electric and Exxon. Mr. Robinson’s consulting

experience began in 2001 as a Senior Consultant with Towers Perrin and continued as Managing Director of Steven Hall & Partners.

A graduate of the University of Delaware with a Bachelor’s degree in Business Administration, Mr. Robinson received an M.B.A. from the University of Maryland.

Mr. Robinson may be contacted at [email protected]. Your comments and opinions are encouraged and welcomed.


Too much attention is paid by advisors to accumulation of assets by executives in nonqualified deferred compensation plans, and not enough on what’s left at retirement. Taxes and income timing are two major factors in retirement planning that must be dealt with today. That lump

sum distribution may protect your assets against your employer’s creditors, but the long reach of Uncle Sam could beat the heft out of what you eventually pocket. In this article, we share two ways to manage your distributions now for better cash flow decisions in the future.

With the arrival of 2011, federal income tax rates will jump from 35 to 39.6 percent. Already, tax rates at the state level are climbing as governments scratch out revenue and cut spending. Yes, the entire country is busy digging itself out of an unprecedented economic hole. And, it hurts.

To pay off deficits, regulators have targeted personal investment income for higher taxes. The long-term capital gains rate for 2010 moves up from 15 to 20 percent, as do taxes on dividend income, which more than doubles 15 to 39.6 percent. Don’t forget the added 3.8 percent Medicare withholdings you will have on investment income beginning 2013. In graphic terms, Chart I shows where we stand.


Chart I: On the Rise

Under today’s tax conditions, how do executives gain maximum value from their nonqualified deferred compensation (NQDC) plans? Rather than dispense any more bad news, here’s a big dose of good news—your NQDC arrangement can now become more attractive and essential than ever with a few simple adjustments in plan flexibility.

But first, a reality check.

Admittedly, once IRC Section 409A was adopted, the specter of risk loomed large over NQDC participants, many of whom felt compelled to take a lump sum distribution from plans. That meant having to fend for themselves. If they left the money with their former employer, they were considered an unsecured creditor with all the risk that implies. And this risk is fearsome.

Over the last few years we have witnessed some of the strongest companies in the country like AIG, Citigroup, Lehman Brothers, and Bear Sterns get into trouble or go out of business. In today’s brave new world of business, you need to ask yourself: Who will run your company five, ten, or fifteen years after you retire? Once your distribution election is made, there is no going back.

Examine the facts in Chart II on the following page, and then compare the value of a $1 million account balance paid at retirement, and invested individually, versus what happens when the participant leaves the balance with their employer and takes payout over a 15-year period.

NQDCs RestrictedUnlike NQDCs, 401(k) retirement plans are portable, following an employee throughout his or her career. When you do change employers, you enjoy the flexibility to take any one of these four paths:

� Leave assets with old employer, assets fully protected by ERISA

� Complete a 401(k) rollover to new employer, retaining ERISA protection

� Complete a 401(k) rollover and move the assets to an Individual Retirement Account (IRA)

� Cash out proceeds, pay taxes and a 10% penalty fee (if you cash out before the age of 59½)

2010 2011Federal Income Tax 35.00% 39.60%Short Term Capital Gains 35.00% 39.60%

Long Term Capital Gains 15.00% 20.00%

Income Tax on Dividends 15.00% 39.60%

Medicare (unlimited) 1.45% 3.80%


Chart II: Post Retirement Comparison

Note: This is a hypothetical taxable investment for illustration purposes only.

With nonqualified plans, which typically hold much larger asset balances, there are only two options: Take the lump sum or leave it with your old employer under your pre-election instructions.

Plan Design GapThere is another influential restriction. Since nonqualified plans cannot directly provide a tax-free rollover at retirement, most plan designs do not anticipate or provide for efficient nonqualified plan distributions. As stated earlier, Section 409A has forced individuals to make final elections on when and how nonqualified benefits are paid, often in the face of insurmountable risk. This risk exposure, combined with persistent market uncertainty, leads many individuals to choose lump sums at retirement. And, as we see in Chart II, that decision has the potential to cost the participant hundreds of thousands of dollars—the difference between retirement security and retirement inadequacy.

Pre-Tax Balances Left with Employer Invested Individually

GrossAnnual

Payment

7%InvestmentEarnings

AccountBalance Year Annual

Payment7%

Earnings

Tax onGains

AccountBalance

1,000,000 Account Balance 600,000

102,612 62,817 960,205 65 60,448 37,769 (10,575) 566,745 102,612 60,032 917,625 66 60,448 43,904 (12,293) 537,908 102,612 57,051 872,064 67 60,448 41,885 (11,728) 507,617 102,612 53,862 823,313 68 60,448 39,765 (11,134) 475,800 102,612 50,449 771,150 69 60,448 37,537 (10,510) 442,378

102,612 46,798 715,336 70 60,448 35,198 (9,855) 407,273 102,612 42,891 655,615 71 60,448 32,740 (9,167) 370,398 102,612 38,710 591,713 72 60,448 30,159 (8,445) 331,665 102,612 34,237 523,339 73 60,448 27,448 (7,685) 290,979 102,612 29,451 450,178 74 60,448 24,600 (6,888) 248,243

102,612 24,330 371,895 75 60,448 21,608 (6,050) 203,353 102,612 18,850 455,657 76 60,448 18,466 (5,171) 156,201 102,612 12,987 545,283 77 60,448 15,165 (4,246) 106,672 102,612 6,713 641,182 78 60,448 11,698 (3,276) 54,647 102,612 0 743,794 79 60,448 8,057 (2,256) (1)

1,539,180 Total 906,720

Amount Distributed 1,539,180 Amount Distributed 906,720 40% Tax (615,672) Additional Tax 0 Net Distribution 923,508 Net Distribution 906,720

Blended Tax Rate 28%


We are pleased to share a third option for NQDC distribution. Many executives have begun to take advantage of this newer concept but your current plan administrator may not be aware of this option.

New Distribution OptionsMost major firms that provide nonqualified plan administration offer distribution flexibility with both in service and retirement distribution features, or as we refer to them—buckets.

Notice the illustration below; it is a typical account in which a participant has designated several in-service distribution features to help pay college cost and other short-term needs, but only one or two for retirement. Yet it is in these retirement buckets where you can set aside serious monies. This is especially true if you elect to take the money over a period of time, say five, ten or 15 years. Once the election is taken, you are stuck with the size of bucket you’re holding. The only other option under §409A is to move the first distribution out for five years.

Chart III: Distribution Buckets

Change the When and HowYou can unlock this problem with the right plan administration system because §409A permits a lot more flexibility than your current administrator may allow. All you need to do is change the when and how. You can have unrestricted buckets with smaller average balances and subject less money to the five-year delay.

Chart IV illustrates the benefit of choice and flexibility as you unlock yourself from this trap. Participants may elect both retirement and in-service distributions today, and decide later on future cash flow needs.

Chart IV: Big vs. Small Buckets


Under this option, if your defer money for a ten-year period, rather than let it all fill one big retirement bucket, paid out on your single election over five, ten or 15 years, you would hold ten small buckets inside your big bucket, that allow you to defer some or all to a future date.

Let’s make it even simpler. You can easily manage these decisions online, [see Chart V] and give yourself substantially more control over your retirement distribution. And even though you still face risk as a company general creditor, the added flexibility of changes in your buckets soothes the sting. In fact, this one feature adjustment can save you untold dollars and wrap you in peace of mind for retirement.

Chart V: Online Control

In-Kind DistributionIn-kind distribution is the second alternative to lump sum distribution. The practice is growing in prevalence because it keeps your buckets full. With this option, the company offers the participant assets from the plan as an “in-kind” distribution. Your current plan documents may already provide this option. This practice is a far better alternative to a lump sum distribution election. Here is why.

At retirement, rather than give you the cash from the plan assets held at the company or in its rabbi trust, the company can give you those assets which historically provided the company with tax-deferred or tax-free benefits such as mutual funds or life insurance. These assets were used at the company level for good reason. Why not allow the executive to now gain the benefit in retirement?

By example, view Chart VI on the following page. Once again, we illustrate the $1 million pre-tax investment, only now under the in-kind option. After withholding 40 percent in taxes ($400,000), the company gives the executive the life insurance policy it held on the executive’s life. The policy has a current cash value of $600,000, the same amount the executive would have had after tax if he took the distribution in cash.


Chart VI: Advantage of In-Kind Distribution

By taking the policy, the executive gains many benefits:

� A non-taxable life insurance benefit

� Tax-deferred growth on the same investments held in the deferred compensation plan

� Non-taxable income from the policy at retirement

� Payments not subject to §409A

� In-kind distribution net of all taxes paid

Most corporations hold little interest in owning life insurance assets long after an executive retires. By using this in-kind distribution option, the company can expense the asset today and provide real value to the executive tomorrow.

Now the executive owns an asset that continues to grow tax deferred and s/he is able to withdraw income as needed, without the restrictions of §409A. Plus, the executive realizes the power of a non-taxable life insurance benefit. Certain policies are designed to restore the taxes ($400,000 in our example) when the executive takes distribution, allowing them to grow the money as if it were pre-tax. With the in-kind feature designed into an NQDC plan, the participant is better able to grow income and increase distributions due to the added leverage.

Remember, the when/how change followed by in-kind distribution is the one-two punch of NQDCs. Think of Floyd Mayweather Jr., the penultimate defensive fighter and welterweight champion. He doesn’t take solid hits—and never a pummeling. His strategy is well planned and executed, even if his mouth isn’t.

For more information on how to keep your NQDC well defended from solid hits, contact RCG at [email protected].

After-tax Lump Sum End of Year ExecutiveSERP Taxes Net Annual Account In-Kind Paid Tax Total Net Annual Net Cash Value Net Death

Age Payment Paid Benefits Dist. Balance Dist. in Cash Paid Dist. Dist. Cash Value Improvement Proceeds#REF!#REF!

65 1,000,000 (400,000) 600,000 0 629,400 600,000 400,000 (400,000) 600,000 0 643,714 14,314 1,522,196

66 0 0 0 0 660,241 0 0 0 0 0 688,422 28,181 1,566,456

67 0 0 0 0 692,592 0 0 0 0 0 735,911 43,319 1,612,837

68 0 0 0 0 726,529 0 0 0 0 0 789,266 62,737 1,666,122

69 0 0 0 0 762,129 0 0 0 0 0 846,273 84,144 1,722,114

70 0 0 0 0 799,474 0 0 0 0 0 907,173 107,699 1,780,766

71 0 0 0 0 838,648 0 0 0 0 0 972,452 133,804 1,842,858

72 0 0 0 0 879,742 0 0 0 0 0 1,041,890 162,148 1,907,773

73 0 0 0 0 922,849 0 0 0 0 0 1,116,068 193,219 1,976,987

74 0 0 0 0 968,069 0 0 0 0 0 1,195,328 227,259 2,050,594

75 0 0 0 0 1,015,504 0 0 0 0 0 1,280,313 264,809 2,129,133

76 0 0 0 0 1,065,264 0 0 0 0 0 1,370,778 305,514 2,211,972

77 0 0 0 0 1,117,462 0 0 0 0 0 1,467,283 349,821 2,299,657

78 0 0 0 0 1,172,217 0 0 0 0 0 1,571,388 399,171 2,394,387

79 0 0 0 0 1,229,656 0 0 0 0 0 1,682,914 453,259 2,496,035

80 0 0 0 0 1,289,909 0 0 0 0 0 1,801,729 511,820 2,604,537

81 0 0 0 0 1,353,115 0 0 0 0 0 1,928,795 575,681 2,721,007

82 0 0 0 0 1,419,417 0 0 0 0 0 2,064,892 645,475 2,846,643

83 0 0 0 0 1,488,969 0 0 0 0 0 2,210,373 721,405 2,981,320

84 0 0 0 0 1,561,928 0 0 0 0 0 2,364,723 802,795 3,124,033

85 0 0 0 0 1,638,462 0 0 0 0 0 2,529,620 891,157 3,276,874

86 0 0 0 0 1,718,747 0 0 0 0 0 2,704,443 985,696 3,439,297

87 0 0 0 0 1,802,966 0 0 0 0 0 2,890,941 1,087,975 3,613,630

88 0 0 0 0 1,891,311 0 0 0 0 0 3,088,851 1,197,540 3,799,612

89 0 0 0 0 1,983,985 0 0 0 0 0 3,299,517 1,315,532 3,998,793

90 0 0 0 0 2,081,201 0 0 0 0 0 3,523,938 1,442,738 4,212,074

91 0 0 0 0 2,183,179 0 0 0 0 0 3,763,473 1,580,293 4,440,559

92 0 0 0 0 2,290,155 0 0 0 0 0 4,017,527 1,727,371 4,681,118

93 0 0 0 0 2,402,373 0 0 0 0 0 4,287,458 1,885,085 4,933,735

Baseline PAYG SERP In-Kind Distribution of COLI Policy


12340 El Camino Real, Suite 400San Diego, CA 92130

Phone: (858) 677.5900Fax: (858) 677.5915

[email protected]

Investors should consider the investment objectives, risks and charges and expenses of the contract and underly-ing investment options carefully before investing, The prospectus contains this and other information about the in-

vestment company and must precede or accompany this material. Please be sure to read it carefully.

The opinions, estimates, charts and/or projections contained hereafter are as of the date of this presentation/material(s) and may be subject to change without notice. RCG endeavors to ensure that the contents have been compiled or derived from sources RCG believes to be reliable and contain information and opinions that RCG believes to be accurate and complete.

However, RCG makes no representation or warranty, expressed or implied, in respect thereof, takes no responsibility for any errors and omissions contained therein and accepts no liability whatsoever for any loss arising from any use of, or reliance on, this presentation/material(s) or it contents. Information may be available to RCG or its affiliates that are not reflected in

its presentation/material(s). Nothing contained in this presentation constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any investment product. Investing entails the risk of loss of principal and the investor alone assumes

the sole responsibility of evaluating the merits and risks associated with investing or making any investment decisions.

This report contains proprietary and confidential information belonging to RCG (www.retirementcapital.com). Accep-tance of this report constitutes acknowledgement of the confidential nature of the information contained within.

Securities Offered Through Retirement Capital Group Securities, Inc., a Registered Broker/Dealer, Member FINRA/SIPC.

Retirement Capital Group Securities, Inc. is a wholly owned subsidiary of Retirement Capital Group, Inc.William L. MacDonald, Registered Representative | California License #0556980


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