In assessing competitive compensation levels and designing base salary and incentive compensation plans, we offer customized solutions to match the different needs of public and private companies, and not-for-profit organizations.
Public Companies have increased responsibilities under current statutes, with increased scrutiny from shareholders, regulators and legislators. Stock plans are more expensive than ever and the methodology to determine cost (i.e., FAS123R) is complicated.
Owners of privately held businesses have their own challenges; for example, how to keep the senior executives motivated and loyal, often without providing an actual ownership interest in the company.
Not-for-Profit organizations, and their Board members, expose themselves to penalties imposed on them personally for "excessive" compensation paid to executives under IRC Section 4958. Click here to go to our Not-For-Profit section.
We understand these issues and offer incisive solutions through Compensation Audits to provide a quick analysis of special issues like market rate comparability, exempt/non-exempt issues or pay discrimination vulnerabilities. More detailed projects might cover Board compensation, bonus programs, stock compensation plans and deferred compensation arrangements.
Effective and appropriate executive compensation programs and plans are more important than ever. Base salary, bonus and incentive plans, stock plans and executive benefits must be effective, competitive, appropriate and defensible. Board remuneration plans require specialized knowledge and experience. The majority of our projects include executive compensation plan design.
Getting the salary guidelines right (grades, ranges, etc.) is critical and we assist clients by determining competitive practices, designing simple or comprehensive pay delivery systems, conducting surveys, preparing job descriptions, developing customized job evaluation systems, and developing enhanced performance management programs.
Sales Incentive Compensation Plans are the most complicated kinds of plans to design, but also some of the most important. Every good seller needs the motivation provided by an effective sales compensation plan. Companies should review their sales incentive compensation plans periodically because these plans, perhaps more than any other type of plan, often do not keep pace with the company's and the sales staff's changing needs.
Performance Management Programs include appraisals or evaluations that are essential to developing employee strengths, guide increase decisions, and support the discipline process.
Custom Salary Surveys can be conducted when clients need competitive salary information that is not available except through a custom survey.
Alternative Reward Programs use creative ways to encourage and reward staff performance. LCI has designed customized programs to meet specific needs.
A publicly held high growth Dot.com company needed to establish it's own culture after being spun off from a parent company.
We worked with the executive team and Board on virtually all aspects of direct compensation: salary grades and ranges, incentive plans, stock plans and Board remuneration.
The CEO of a NYSE company served for several years for modest base salary and bonus. He wanted to set a good example plus ensure that the turnaround needed was well underway before he accepted an increase.
In these days of executive compensation scandals and scrutiny, CEO compensation can be difficult to assess. In this case, when the time came, neither the Board nor the CEO knew what would be appropriate. LCI analyzed more than 30 proxies and several surveys and then designed a compensation program just for the CEO. It included adjustments to base salary, more appropriate incentive and stock opportunities, and special executive insurance plans covering both long term care and executive disability income replacement coverage.
A private company needed key executive incentives—including long term incentives, to motivate productivity.
Private companies face specific challenges when it comes to motivating and rewarding key executives. For one, stock-based plans are usually not possible. For another, the owner might not want to share private financial information with the plan participants. Lastly, picking the right performance measure can be difficult. We have worked with dozens of companies to find the right balance of performance, funding and vesting requirements.
Board members can be held personally liable for their decisions on compensation.
NFP organizations must comply with statutes applying only to them. Under the wrong set of circumstances, a Board member of a NFP might find himself personally liable if the IRS determines an executive is paid too much. "Paid too much" is not defined so often a market analysis is required. We have worked with several organizations to determine any Section 4958 exposure and ensure compliance.
"Mark worked with Travelocity.com during its formative stages, advising us on virtually all forms of compensation, from the Board to the staff. He helped us determine our philosophy, strategy and tactical responses to a very fluid technical market and changing organization needs. We came to view him as a trusted advisor."
"Mark has an extensive knowledge of executive and general compensation that he is easily able to apply in very practical ways to achieve effective solutions at the board or company level."
Over the years we've seen certain problems crop up on a regular basis. Though common, the following short list of pitfalls often have innovative and even bold solutions that turn blunders into opportunities. In some cases they can be avoided entirely.