Executive Benefits

Employee benefits have become a major component of employee compensation. These benefits come in the form of both government and employer sponsored programs to provide coverage in such areas as life insurance, disability benefits, health care and dental costs, pensions and other forms of retirement savings as well as more recent innovations such as employee assistance programs. The latter may afford access to counseling for alcohol or drug abuse, marriage or other family concerns, credit problems and so on.

Employee benefits are the foundation of an excellent compensation strategy for executives as well. The ability to separate the executive class allows the business owner to provide selective options for the executive. Items such as optional life insurance, health care spending accounts, individual pension plans and cost plus health benefits are available to help recruit and retain key executive players.

Executive groups are the corporation's brain trust. They tend to put in more hours, are responsible to make the most difficult and important decisions and yet often have the poorest level of benefits.

The standard group benefits package provides a good solid base of coverage in all areas for the majority of the staff in a corporation. Most of the staff have a good percentage of their income replaced and health care provided for by a standard group benefit plan.

However, there are limits on the coverage amounts and quality of benefits provided to the group as a whole. As incomes increase, in a corporate environment, arbitrary maximums that limit coverage can result in a very low percentage of income replaced. Relative to other employees, the level of benefits funding provided to the executive is inferior. This coverage and funding gap creates a form of reverse discrimination for high income earners.