Cases 9 to 12
Outmoded Deferred Compensation Plan
A Scorp with a national footprint had two owners, minimal top management and 250 employees in one location.
Company had deferred compensation arrangement with no funding and subject to creditors. Company also had an outdated buy/sell agreement and estate plan for the owners. In addition, they were interested in increasing their golden handcuffs for their financial officer and operations officer.
BMI reviewed the existing deferred compensation funding for the company and recommended a restructure which included changing the documents to reflect potential creditor and change of control issues. BMI also recommended an additional synthetic equity arrangement for the top two officers to be funded by the company with tax deductible dollars. BMI reviewed the buy/sell and estate plans for the owners. We suggested several changes to improve the tax impact of funding they had in place.
Case No. 9
Case No. 10
Conversion to S-Corp
Large privately held CCorp mortgage company with multiple locations. Majority shareholder had sold stock to several key managers.
Majority Shareholder wanted to convert company to S Corp to save on double tax. He also wanted to simplify decision making by purchasing all of the stock from the minority shareholders.
BMI arranged for an appraisal of stock values and recommended a tax free purchase of stock. Plan would convert stock to cash over an extended period of time. Shareholders would be able to defer tax on sale until they actually took receipt of the sales proceeds. In the meantime, the value would continue to grow with interest tax deferred until liquidation. Subsequent to purchase, owner entered into long term buy/sell agreement with key employees to protect company in the event of his death.
BMI recommended funding a non-qualified synthetic equity replacement plan for top management. Plan was tax deductible to company and had minimal tax impact on participants. Benefits would be received tax free at retirement.
Disability Plan for Key Personnel
Large building contractor with several key personnel.
Company was concerned about cyclical nature of construction and wanted to tie key management to company by using a long term incentive plan. In addition, company recognized there was a potential disability liability in the event one of their key people were hurt and unable to work.
BMI was retained to design and implement a long term incentive plan for the company. Plan was designed to address the key factors facing a construction company. Plan included a disability feature which covered the key managers for 65% of salary in the event of disability from accident or sickness. Deferral program allowed key employees to reduce compensation and contribute to a long term investment plan with no downside risk during the accumulation period.
Case No. 11
Case No. 12
Buy/Sell Agreement with Estate Plan
Two brothers and two minority shareholders owned an interest in a medical manufacturing company. Company had 250 employees with significant growth potential.
Majority shareholders had no estate plan or buy/sell agreement to protect family or company. Minority shareholders wanted an exit plan in case majority shareholders should decide to sell or might die.
BMI, working with their attorney and accountant structured a buy/sell agreement based on appraisal done by an independent appraisal company. Buy/sell was coordinated with their estate plan to provide tax free dollars to finance purchase of stock and payment of estate taxes.