Benefits June 30, 2004

Most Tech Companies Have a Nonqual Option

June 30, 2004 (PLANSPONSOR.com) - The majority of US technology companies now offer nonqualified retirement plans as an incentive to attract and retain high-level employees.
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Fifty-six percent of the 347 companies examined by executive benefits consulting firm The Todd Organization offer at least one nonqualifiedretirement plan such as a voluntary deferred compensation program,supplemental executive retirement plan, or other type of plan. Among the plan options, the survey found technology companies are more than twice as likely to offer anonqualified deferred compensation program (with 50% doing so)than a nonqualified defined benefit program (with 24% doing so).

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By sector, The Todd Organization found nonqualified retirement plans are most popular in the Electronics sector, with 66% of companies offering one or more plans, followed by Computer Services (65%) and Telecommunications Equipment (65%). The study also found companies with larger revenues are generally more likely to offer nonqualified retirement plans. For example, while 75% of companies with revenues of more than $1 billion offer at least one nonqualified plan, 44% of companies with revenues of $250 million to $1 billion offer at least one nonqualified retirement plan.

“There are two primary factors driving the need for nonqualified retirement plans at America’s leading technology companies,” Mel Todd, President and Chief Executive Officer of The Todd Organization said examining the results. “First, companies realize that stock options are no longer a ‘silver bullet’ for addressing executives’ compensation and retirement needs. Second, baby boomers are aging and increasingly conscious about the need to save and plan for the future.”

Providing further proof of this contention, the study found executives at technology companies will receive less than 30% of their pre-retirement pay from qualified retirement plans, such as 401(k)s, even if they make the maximum possible contributions to these plans. This is due to restrictions on the amount of pay high-level employees can contribute to their qualified retirement plan options. By contrast, many other employees can accumulate savings from 401(k)s and Social Security that will annually provide them with 70% of final pay upon retirement, the Todd Organization said.

Deals and People June 29, 2004

PBGC Committee Gets New Members

June 29, 2004 (PLANSPONSOR.com) - The Bush Administration has tapped a new chair of the Advisory Committee of the Pension Benefit Guaranty Corporation (PBGC) as well as three committee members.
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Named as chair was Melody McDonald of San Francisco, managing director at RCM Capital Management LLC, a San Francisco investment firm. Her investment management and banking career includes 18 years at RCM and four years at Wells Fargo Bank, according to a PBGC news release. McDonald received a master of arts from the New England Conservatory of Music, a doctorate in music from Stanford University and a master’s in business administration from Harvard Business School.

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Named as committee members were:

  • Thomas Garrott of Memphis, chairman of the executive committee of National Commerce Financial (NCF) Corp., a retail bank where he served as chairman of the board until 2003. He holds a bachelor’s degree in economics from Vanderbilt University and a master’s in business administration from the Wharton School of Finance at the University of Pennsylvania. Garrott will represent the interests of employers in a term that expires in 2007.
  • Betty Scott Ireland of Charleston, W.Va., president and CEO of Jackson & Kelly Solutions LLC, the enterprise arm of West Virginia’s largest law firm. She previously served as head of Jackson & Kelly’s employee benefits group and from 1998 until 2000 was executive director of the West Virginia Consolidated Public Retirement Board. Ireland is a graduate of the University of Cincinnati. She will represent the interests of employers until 2007.
  • James Nevels of Swarthmore, Pa., chairman of the board of The Swarthmore Group, an independent investment advisory firm. Nevels earned a bachelor’s degree in philosophy and political science from Bucknell University, a J.D. from the University of Pennsylvania Law School and a master’s in business administration from the Wharton School of Finance. He will represent the interests of the general public until 2007.

The PBGC is the nation’s insurer of private-sector pension plans that receives its financing from insurance proceeds paid by covered companies and investment income.

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