(PRWEB) September 07, 2012
The Law Firm of Pozzuolo Rodden P.C., announces the release of the article "Business Planning: How to Retain Key Senior Employees- Golden Handcuffs." Below is a sample of the first couple of paragraphs. If you would like to read more, please read the full article and other corporate law, or estate planning topics at http://www.pozzuolo.com/Pubs_Newsletters.shtml
How To Retain Key Senior Employees- Golden Handcuffs
In the new economic environment where margins have been slashed and companies are trying to increase their market positions in an increasingly global market it is extremely important to retain key employees and make the most of their experience, know‐how and business acumen. It is a major detriment to the business when a manufacturing or sales manager takes his expert skills, information and body of knowledge to a competitor. Not only does it give your competitor a leg up, but it also leaves a gaping whole in your workforce and profits when you must go through the costly search and training process to fill the gap. One invaluable tool to help defend against this is the use of what is termed “golden handcuffs”. Golden Handcuffs are a way to arrange the compensation system so that these valuable employees are incentivized to stay with your company.
The term golden handcuffs is a general term for compensation mechanisms that incentivize an employee to remain with a company and to maintain proper conduct during and after employment. They are called golden handcuffs because if the employee leaves or commits misconduct, they either forfeit deferred accrued compensation or they suddenly must bear the burden of certain monetary benefits that were previously paid by the employer. The financial benefits essentially lock the employee in with the company and help fend off competitors trying to cherry‐pick key employees. There are generally three types of golden handcuffs that can be used. The first type is where an employee does not become vested in certain deferred compensation until after a number of years of service. Thus, if an employee leaves early, they in essence forfeit all or a portion of compensation that have accrued during his service. Examples of this would be a non‐qualified deferred compensation plan (NQDC) or phantom stock plan. In each of these, the employee may vest a portion of the total benefit each year, but the benefit is not fully vested for a number of years. If the employee leaves 8 years into the deferred arrangement that does not fully vest until the 15th year, the employee loses the nonvested deferred compensation. The first type is beneficial at helping ensure a minimum number of years of employment after the adoption of such a plan.
If you would like to read more, please read the full article "Business Planning: How to Retain Key Senior Employees- Golden Handcuffs" and other corporate law or estate planning topics at http://www.pozzuolo.com/Pubs_Newsletters.shtml
Pozzuolo Rodden, P.C. provides specialized cost-effective legal services to privately held business owners and high-net-worth clients in Pennsylvania and New Jersey in excess of 35 years.
Business planning and transaction, complex business litigation, commercial real estate and development, construction law and litigation, advanced estate planning and administration, tax and pension law, high profile and intricate family litigation, and employment law and litigation.
Pozzuolo Rodden, P.C.
Counselors at Law
2033 Walnut Street
Philadelphia, PA 19103