Compensation Planning
Compensation Planning
By: Wilmington Trust

It is essential for businesses to hire and keep good employees in order for the company to succeed. This is especially true in today's tight labor market. The following is an example of how to recruit and retain good employees:

Mr. Jones is the CEO of a service company. He has found it difficult to lure top prospects to work for the company. The company has also experienced significant employee turnover, which has led to client dissatisfaction. Mr. Jones wants to do something to attract good workers and to keep them with the company. To accomplish this, he has established several recruiting and retainment programs.

First, he established a compensation and bonus plan that would attract good workers to the company. Second, he had employees sign employment contracts. Third, he had employees sign non-compete agreements to restrict their ability to compete with the company if they were to leave employment. Fourth, he issued stock options to employees, which included a vesting schedule, and tied the value of the incentive to the success of the company. Fifth, he created a phantom stock plan. Sixth, he added an employer matching contribution to the 401(k) Plan that has a long vesting schedule.

Mr. Jones' techniques created valuable incentives that caused prospects to want to work for the company and helped to keep good employees with the company over the long haul.

This article is for informational purposes only and is not intended as an offer or solicitation for the sale of any financial product or service or as a determination that any investment strategy is suitable for a specific investor. Investors should seek financial advice regarding the suitability of any investment strategy based on their objectives, financial situations, and particular needs. This article is not designed or intended to provide financial, tax, legal, accounting, or other professional advice since such advice always requires consideration of individual circumstances. If professional advice is needed, the services of a professional advisor should be sought.


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