Challenge: With a critical business transition looming, there was concern that the CEO was at risk of leaving and that the pay package was not competitive with current market rates.
Solution Deployed: We conducted a thorough analysis of base pay, short-term incentives, long-term incentives (equity equivalent) and perquisites. Target pay rates were identified based on a combination of publicly traded and privately held pay packages.
A synthetic equity plan was then developed to bring the total direct compensation up to a blended market pay rate, which focused on shareholder return with a four-year vesting horizon and a grantor trust created to support the non-qualified benefit obligations of the employer.
The plan included a kicker for the first few years that provided employee retention until the full plan took effect during the 4th year. Also, the annual discretionary bonus changed into an incentive program that measured short-term results and balanced the long-term focus of the synthetic equity plan.
Business Value Delivered: Our client was able to address their concern creatively and pull together a competitive package enabling them to retain and incentivize their CEO.
Client Industry: Construction / Real Estate
Project Type: CEO Compensation, Long-term Incentive
Business Structure: For-Profit, Privately Held