Big Red Car here. Cloudy day and a bit muggy. Well, it is May and we expect a lot of our rain in the month of May culminating with flooding on Memorial Day. That’s the way we roll here in the ATX.
So The Boss is back on his jag about the C level employment agreement and the issue specifically of benefits.
Remember this series is all about negotiating the all important Employment Agreement.
We last spoke of the issue of “salary” here — “C” Level Employment Agreement — Salary. You may want to go check that post out before reading further. Or, maybe not. [STFU, Big Red Car. Haha. Let the folks do what the Hell they want to do themselves. stop bossing everybody around, Big Red Car.]
The Employment Agreement should include “benefits” as part of the balanced mix of compensation — remember: salary, benefits, short term incentive compensation, long term incentive compensation, something “special”.
Benefits are both a way of extracting value but are also often very tax efficient. Tax efficient means you are buying these benefits with “pre-tax” dollars as opposed to post-tax dollars. In this way, the government is your partner as they are kicking in almost 50% of the direct cost by your not having to pay income taxes, tax surcharges (Obamacare) and payroll taxes. This stuff adds up fast.
Benefits can be very, very important from a value perspective.
When you hear the word “benefits”, you immediately think of the following laundry list of typical benefits:
Insurance — health, dental, vision, life, disability
Holidays — typically up to 10-12 national holidays annually
Authorized time off — sick days, bereavement leave
Retirement funding — 401K, IRA, other retirement funding mechanisms
Cafeteria 125 plan
Company supplied credit card
Company supplied computer equipment (desktop, laptop, tablet) and cell phone
Internet services and phone service/data plans
Employee Stock Purchase Plan
Employee Stock Ownership Plan
The typical benefits are well known. There are others which are less well known but which are perfectly appropriate to provide to a “C” level employee as part of a well crafted Employment Agreement.
Here are some for your consideration:
Automobile or automobile allowance
Wellness program expenses
Health and medical savings accounts
Country club or social club membership
Premium social media membership expenses
Premium travel membership expenses
Books allowance and reimbursement
Professional entertainment allowance
Continuing education reimbursement
Tuition fund for children
Camp expense reimbursement
Home loan assistance or direct loan
Family accompaniment travel stipend
Service based sabbatical
Let me take just a second and discuss the implications of an automobile or automobile allowance. [Hey, Big Red Car, an automobile allowance? Sounds like home cooking to me, Big Red Car. Haha.]
An automobile, when furnished by the company, is a great benefit for the C level employee as it includes the capital cost of the automobile, the insurance cost, the maintenance cost and the cost of fuel when driven for company business.
As you can see from the above lists, the magnitude of benefits and their value can be quite expansive and thus create a meaningful value proposition for the C level employee.
Give this some thought as you negotiate your benefits package as part of the C level Employment Agreement.