Benchmarking Nonqualified Plans

When you design your executive compensation programs, most of the work is done through quantitative benchmarking. Base pay, bonus programs and long-term incentives are all benchmarked against peer groups. When it comes to the benefits part of executive compensation, it is usually finessed with a message such as, “that’s about right.” In our experience, when we asked why, we were told that the traditional executive compensation consultants just can’t figure out how to put a quantitative value on nonqualified plans and other executive benefits.

October Three is different. Our standard approach develops an annual amount for each of those programs that can be expressed as an annual dollar amount that moves with pay. It’s simple and understandable. It can be explained to shareholders. And it makes sense.