Incentive Compensation for 建设 Industry Employers

Good employees are hard to find, particularly in the construction industry. If your business has struggled to attract and retain top talent, a nonqualified deferred compensation plan (“NQDC plan”) may be the tool you have been missing.

Compensation packages in the construction industry typically combine a relatively low rate of base pay with substantial project-based commissions or bonuses. While effective at rewarding productive employees upon completion of key projects, such compensation packages leave the door open to poaching by competitors once annual bonuses have been paid.

Adding a NQDC plan would enable the employer to introduce an additional element to the compensation package: time. 例如, 而不是提供50美元,年度现金奖金, NQDC计划可能提供200美元,000 cash bonus that is payable only if the employee remains with the employer for four years. Making a significant amount of compensation dependent on future services encourages retention and incentivizes employees to take the long-term financial success of the company into account. 

A well-designed NQDC plan offers the following features and advantages:

• 只有少数关键员工才能参与, with no requirement to offer similar benefits to the workforce at large.
• Any benefit amount is allowable, and benefits can differ from participant to participant.
• Benefit determinations can be discretionary; formula-based (for instance, a specified percentage of revenue or profits); or a combination of the two.
• Vesting provisions can extend as long as the employer desires. (Typical vesting schedules include a rolling four-year vesting schedule applied to each annual benefit, or, for employers looking to encourage longer-term retention, a graded 10-year vesting schedule with the bulk of vesting delayed until the later years).
• Accelerated vesting and/or early payout can be provided in certain circumstances, 比如死亡, 残疾或控制事件的变化.
• Benefits are not required to be pre-funded by the employer.
• Benefits are 税ed to the employee and deductible by the employer in the year paid (i.e.(直到授予之后). 

A NQDC plan can also be designed to include “phantom equity” features that mimic the economic impact of business ownership. A phantom equity plan measures benefits not in terms of cash, but rather in terms of hypothetical shares that mirror the value of the enterprise or even the employee’s specific division. As the company grows, so does the value of the participant’s account.

Reach out to a member of the Schneider Downs 退休的解决方案 team to learn more about how your company might benefit from a custom-tailored NQDC plan.