Nonqualified deferred compensation plan expertise is essential to improving employers' ability to retain and reward top leaders and key contributors they can't afford to lose
NEW YORK, Sept. 9, 2024 /PRNewswire-PRWeb/ -- NFP, an Aon company, and a leading property and casualty broker, benefits consultant, wealth manager and retirement plan advisor, today released its 2024 US Executive Compensation and Benefits Trend Report. The report features insights on optimizing executive benefits strategies with a variety of data points. For instance, the report learned that 87 percent of survey respondents cannot afford to lose key executives.
This desire to retain executive talent and other key contributors is influencing many business decisions, according to the report. Sixty-one percent of respondents said the retention of these leaders has been a top factor shaping executive benefits decisions over the past year. Looking ahead, survey respondents expect the importance of retaining executive talent and other key contributors to increase, with 71 percent saying that the retention of these workers will have a significant impact on executive benefits decisions in the coming years.
"Employers increasingly recognize and understand the link between well-designed executive compensation packages and overall organizational performance," said Tony Greene, president of NFP's Executive Benefits division. "Regardless of company size or industry, teams are less likely to reach their potential if they lack exceptional leadership. Our findings show that comprehensive benefits packages are key to providing the financial incentives needed to attract, retain and reward top talent and put employers on the path to success."
According to the report, 82 percent of respondents identify executive benefits as strategically important to their overall company success. For many companies, nonqualified deferred compensation plans (NQDCPs) are the cornerstone of a successful executive benefits strategy. These plans are attractive to executives and business leaders. Eighty-two percent of companies stated that offering NQDCPs has a positive impact on plan success, and 83 percent indicated that their executives are satisfied with how NQDCPs impact their retirement goals.
Even as business leaders recognize the positive impact of executive benefits, there's a disparity in how well these packages are understood, with only three in ten (29%) fully comprehending their benefits. "There's a clear need for improved communication," said Greene. "Employers should enhance their outreach and education to ensure executives fully grasp and appreciate the value of their benefits, particularly complex offerings like NQDCPs."
The value of NQDCPs can extend throughout an organization to reach various talent levels of a company, yet only half of the surveyed companies offer them to key contributors in their organization other than executives. "NQDCPs typically target employees earning $150,000 and above, recognizing that more than just executives can benefit from a well-designed plan," said Greene. "By expanding eligibility to more employees, organizations can use NQDCPs to compensate and help retain key contributors, including mid-level managers and critical technical experts who are essential to driving an organization's success."
Despite the recognition of executive benefits for retirement planning purposes, the survey found only 20 percent of employers offer financial advisory services following payments from NQDCPs. "By providing ongoing financial guidance, companies can help ensure the impact of NQDCPs extends well into retirement, while enhancing executives' appreciation of the long-term value of these plans," said Greene.
Additional mechanisms like performance-based incentives (90%), supplemental executive life insurance (59%) and fringe benefits like first-class air travel (51%), have also demonstrated a positive impact on executive benefits plan success.
"At a time when nearly half (44%) of executives are demanding more from their benefits plans and offerings, NQDCPs are a powerful tool to retain and reward top talent," said Greene. "The diversity of executive behaviors underscores the need for flexible retirement savings that can accommodate various strategies and timelines. Putting the right program in place positions a company as an employer of choice in a competitive talent market and sends a clear message that they care about employee financial well-being."
About NFP's 2024 US Executive Compensation and Benefits Trend Report
NFP designed the 2024 US Executive Compensation and Benefits Trend Report to help businesses develop benefits plans that fit the varying needs of their executives. Insights cited throughout this report were sourced from NFP's comprehensive database, as well as an online survey conducted among 209 executive benefits decision-makers (who partner with NFP for executive compensation packages) in the summer of 2024.
About NFP
NFP, an Aon company, is an organization of consultative advisors and problem solvers helping companies and individuals address their most significant risk, workforce, wealth management and retirement challenges. We are more than 7,700 colleagues in the US, Puerto Rico, Canada, UK and Ireland serving a diversity of clients, industries and communities. Our global capabilities, specialized expertise and customized solutions span property and casualty insurance, benefits, wealth management and retirement plan advisory. Together, we put people first, prioritize partnerships and continuously advance a culture we're proud of.
Media Contact
Josh Wozman, NFP, 4153186441, [email protected], nfp.com
SOURCE NFP
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