C-Suite Session on Employee Retention

Recently CCBN had a C-Suite call with representatives of EBS on the topic of employee retention plans. This was an excellent session put on by Phillip Pickett and Jeffrey Peterson of EBS, focusing on the importance of an employee retention plan that is designed to provide participants with in-service distributions upon vesting. An employee retention plan is an extremely valuable tool to retain the services of key individuals who are instrumental in creating value for the bank. Also, an employee retention plan is an important recruiting and incentive tool the bank can use to acquire new individual talent. This type of in-service retention plan can be utilized at multiple levels throughout the organization and is not limited solely to C-Suite executives. 

The advantages to the employee retention plan are the following: 

• Offers tax effective alternatives to higher current compensation.
• Requires less compliance with government regulations than qualified plans.
• Provides an employer control in selecting the participants in a plan.
• Serves as an excellent retention tool for key individual participants who are not considered top level individuals.
• Offers flexibility in adding, modifying or deleting banks’ contributions.
• Allows the bank to make discretionary contributions based on profitability and performance of each participant.

Additional features may include change of control triggers, survivor and disability benefits, hardship exceptions, and non-compete provisions. Bank-owned life insurance can also be used as an informal funding mechanism to help the bank offset/recover the costs of a retention plan. 

We are finding with middle level management that equity plans don't necessarily mean as much to them as cash compensation (even if it is deferred compensation subject to a vesting schedule of 3-5 years). This is a valuable retention tool and human capital program for our banks. We know that retaining key people is so critical to the success of banking institutions.

The PowerPoint presentation that was provided at the C-Suite call by EBS can be accessed by clicking HERE. Also, we encourage you to reach out to the principles of EBS.