Helping Business Owners Attract, Reward, and Retain Key People

Why Executive Retention Matters

The people who make a business work are often the same people a competitor would most like to hire. Retention is therefore a business-continuity question as much as a compensation question.

Arrangements used to retain key people usually combine some form of deferred value with a reason to stay. The design matters: what is offered, to whom, when it becomes available, and what happens if the person leaves.

Executive Bonus Arrangements

An executive bonus arrangement generally involves an employer paying a bonus that is used to fund a policy owned by the employee. Because the employee owns the arrangement, it can function as a long-term retention benefit rather than a company asset.

Terms vary widely — including whether a bonus is subject to a vesting schedule or a repayment condition, and how it is reported. Employers typically confirm those details with their CPA before an arrangement is offered.

Selective Benefit Arrangements

Some arrangements are offered to a defined group of key employees rather than the entire workforce. Selectivity can make a benefit affordable while directing it where it matters most.

Selective arrangements still involve eligibility rules, documentation, and communication obligations. They should be reviewed for consistency with existing plans and applicable requirements.

Employer-Sponsored Life Insurance Considerations

• Whether coverage is group term, individual, or a combination.
• Who owns the policy and who is the beneficiary.
• Whether coverage continues if the employee leaves.
• How the benefit coordinates with coverage the employee already owns.

Employee Financial Protection

Beyond retention, employers sometimes consider how a benefit supports an employee's family if something happens to them. That may include life and disability coverage, or access to planning resources.

For owners, the same questions apply personally — a benefit plan is not a substitute for an owner's own personal protection and retirement planning.

Benefit Coordination

Benefits work best when they are considered together. Retirement plans, group coverage, executive arrangements, and personal policies can overlap or leave gaps depending on how they are designed and communicated.

Reviewing the whole picture — rather than adding one arrangement at a time — helps identify duplication and clarify what each benefit is intended to accomplish.

Tax and Administrative Considerations

Benefit arrangements carry tax and administrative consequences that depend on structure, documentation, and applicable law. Rules change, and treatment can differ by entity type and by participant.

This page does not make specific tax claims. Current treatment should be confirmed with your CPA or tax adviser before an arrangement is adopted or communicated to employees.

Eligibility and Regulatory Compliance

Not every arrangement is available, suitable, or permitted for every employer or employee. Eligibility rules, nondiscrimination requirements, state regulations, and plan documents all shape what can be offered.

Any arrangement should be reviewed by the employer's legal and tax advisers for compliance with applicable requirements before it is implemented.