Incentive Based Compensation Programs: Motive and Focus Key Employees
Empower People to Live Confidently
At Legacy HP, we know confident people who achieve financial objectives and personal aspirations are the ones who power successful companies. We work closely with leadership to design and implement key employee compensation and incentive based compensation strategies everyone will value.
• Wealth building and wealth protection strategies for ownership and management
• Key Employee compensation/benefits strategies motivate and retain your valuable people
• Retention and career planning techniques for vital up-and-coming personnel
• Performance Management Personnel assessment, team cohesion, communication
Incentive Based Compensation
Business owners and leadership work closely with us to implement incentive-based compensation programs that strengthen your company. These programs motivate your Key Employee Group (KEG) and improve their loyalty through clarity and communication.
- Create clarity and direction in business goals and ownership objectives.
- Align your key people (KEG) to these goals and objectives with performance-driven, comprehensive compensation programs.
- Create confidence as a trusted, outside group of mentors and advocates.
Short-Term Incentive Programs (STI)
- Cash-based bonus and represent a percentage of base salary (typically 25%-100%)
- Calculated using specific goals or "target" achievements, usually based on the company's financial plan.
- Most frequently used metric is EBITDA– but you may use any other metric meaningful to you and your position (cost, time to complete jobs, etc.).
Long-Term Incentive Programs (LTI)
- Can be for a specific amount, or based a percentage of their base salary (typically 25%-50%)
- Linked to hitting specific goals (like STI)
- Bonuses are put into programs that will provide income later in life, usually retirement.
- Helps key person and his/her family maintain the same quality of life during retirement
- Tied to vesting and forfeiture– serves as a retention strategy for the key employee in the company
A comprehensive key employee compensation and benefits program will combine both elements along with other potential elements such as Phantom Stock or equity-based compensation programs.
Equity-Based Compensation Programs provide participation in the equity or ownership of the company. While often used and discussed, we counsel with our clients to be careful before offering such programs. Once employees and owners talk through the most important aspects of their family’s financial future, they realize a cash-based bonus plan is in everyone's best interest.
Our Services Include:
- Compensation philosophy development
- Competitive pay and benchmarks analysis
- Incentive design: Align salary and bonus models to short and long-term business targets
- Performance measurement and benchmark selection
- Executive benefits and supplementary retirement income
- Non-qualified deferred compensation and capital accumulation programs design and analysis
- Development of stock option plans
- Executive stock purchase arrangements
- Restricted stock, performance shares and other forms of full value stock grants
- Participant communication
Read more about Incentive Planning compared to Bonus Planning for your Key Employee Group on our blog.
Quotes That Count
A very powerful area of need right now is the transition planning which is financial, but at its core it’s about the transformation of people and their relationships within the company and families (owners, key employees).
Our Expert’s Blog
Characteristics For Your Bonus Incentive Plans
Too often, owners only discover that the compensation plans they’ve put in place for key employees are sadly inadequate when those key employees leave their companies for greener pastures. The departure of one or more of these key employees not only complicates your daily business life, but it can slam shut the door on your exit plans. Without experienced management in place, you may find it very difficult (if not impossible) to leave your business in style.