Benefit programs run the normal range familiar to salaried employees. They include
statutory benefits such as Social Security, Medicare, Workers Compensation, and
Unemployment Insurance. At the same time, executives are eligible for company benefits
such as vacation, holidays, sick days, severance pay, life insurance, and medical
insurance.
In addition to the benefits provided salaried employees, executives are often eligible
to participate in special retirement plans. These plans, unlike those that apply
to all employees, are not protected by federal tax and pension rules and are not
typically secured by a trust. Instead, the amounts in these plans are at risk, and
if the company is unable to pay them, such as in insolvency or bankruptcy, the executive
would lose those funds.
These special plans include the following:
- nonqualified deferred compensation plans which allow executives to voluntarily
defer salary and bonus amounts until a date certain, death or retirement (much like
a non-tax-favored 401(k) plan).
- Supplemental Employee Retirement Plans (SERPs) which are meant to supplement
traditional pension plans, but are at risk
Many nonqualified deferred compensation plans and SERPs are "restoration plans"
designed to allow executives to save the same percentage of income as other employees
may save in tax-favored plans.