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Case #1
Incentive Based Compensation

A Mega Auto Dealership owned by a holding company. Multiple entities include a Bank, Real Estate Development Company and seven auto dealerships.

Ownership wanted to reward key personnel with an incentive based compensation plan based on competitive pay practices in the area. A study would include all facets of executive fringe benefits including group life and disability recommendations.

BMI Solution:
BMI prepared a comprehensive study and report of pay practices in the geographic area. The report pointed out the need for a significant increase in the equity/retirement sector of the client's compensation plan. BMI recommended a mini/max non-qualified pension which would be tied to performance. In addition, BMI installed a discriminatory group life plan which provided a portable benefit at retirement and a disability program for top management.


Case #2
401(K) Contributions

An international distributor with facilities in 16 major cities throughout the United States and Canada.

Company has 5,000 employees including 45 senior management. Company recently terminated their pension plan and installed a 401(k). The inability for top management to contribute more than the 415 limit created a concern. In addition, management wanted to upgrade their disability coverage and life insurance for this group. While fact-finding, BMI discovered there was a deferral incentive plan in place. There was no protection of these funds from change in control or a sale of the company. Another concern was the funds were invested by a local brokerage house and accumulations were taxable to the company.

BMI Solution:
BMI recommended the deferral program be placed in a special trust to protect the capital from any change in management objectives. The trust was also used to shelter the accumulations from tax at the corporate level. The plan was expanded to include the 401(k) excess contributions and it provided a portable life insurance benefit to supplement the existing group life. BMI also designed an executive disability plan for the senior executives which paid the benefits income tax free upon disability.


Case #3
Stock Repurchase

Recreation employer with 90 full time personnel but 1,000 seasonal employees.

Company had too many shareholders and wanted to offer a tax wise program to redeem the stock and reduce the shareholders. In addition, the company wanted to offer a deferral program for the full time personnel.

BMI Solution:
BMI reviewed the employee census and shareholder problems with the client. The most tax wise solution was an employee stock option plan. BMI worked with the advisors to educate and implement the plan. In addition, the company offered limited benefits because of discrimination concerns. BMI designed a non-qualified deferral program for all full time employees which included a death benefit only provision for beneficiaries. The plan was elective, however the DBO benefit was non-contributory.

BMI also designed an incentive compensation plan for top management as well as enhancing their disability coverage through a carve out program.


Case #4
The Retiring Senior Partner

Civil Engineering Firm with 12 partners ranging in ages from immediate retirement to newly admitted.

The senior partner wanted to retire within the year and the partners wanted to offer a reasonable buyout alternative.

BMI Solution:
BMI recognized there was a significant difference between the buy/sell value and the true fair market value of the firm. After performing an appraisal, BMI recommended using an ESOP to buyout the partner. The feasibility study showed a significant savings to the firm if they used the current valuation. If they wanted to use the new valuation, the partners would have had to pay considerably more taxes in order to buy him out.

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