Key Employee Plans

We design arrangements that reward employees who work like owners with a stake in the company's value (Phantom Stock) or future growth in value (Stock Appreciation Rights). If the employee leaves early on, a vesting schedule can reduce or eliminate what an employer has to pay. Plans can be settled in cash or stock depending on the desired outcome, and can be designed to reward employees if the company sells as well.

The Employer makes a tax-deductible bonus to an accumulation-oriented cash value life insurance policy that the employee owns. However, the employee cannot access the cash values until a time that is prescribed via a restrictive access agreement (eg, 5 or 10 years). If the employee leaves, a separate document can be added that requires the employee to repay some or all of the amount paid by the employer.

We can recommend certain strategies that put Key Employees on a path to future ownership in a company while requiring minimal outlay by the employee. In addition, if the employee does not work out, unwinding the arrangements can be very easy for the owner.