Benefits and Compensation

Perks, Imputed Income, and Phantom Stock—Exec Comp’s Tools

Wudyka is managing principal of Westminster Associates in Wrentham, MA. His tips came at a recent BLR/HRhero-sponsored webinar.

Perquisites

Perquisites are benefits unique to executives, says Wudyka. As some may be taxable, always clarify that issue before finalizing your plan. Some examples of perquisites:

  • Country club memberships
  • Cars
  • Financial or legal planning
  • Computers
  • Phones
  • Assistants
  • Special health plans

Imputed Income

Sometimes tax is assessed when a form of compensation is considered “of value” or “excessive.” For example, when too much life insurance (over $50,000) is paid to an employee, the value over $50k is treated as taxable income to employee.

Qualified and Non-Qualified Plans

“Non-qualified plans” plans offer no direct tax advantage to the employee. A common non-qualified plan is the “rabbi trust” (named for its initial beneficiary). Funds are placed in a trust and tax deferred (but not “tax-advantaged”) for the executive. No “change of heart” by employer is permitted. However, in the event of bankruptcy, the funds are not protected.

“Qualified plans” are “tax advantaged” to the employee. Such a plan might, for instance, permit employees to take certain proceeds and then later treat the proceeds as a capital gain instead of income.

Phantom Stock

Companies that have no stock often base incentives on phantom stock, says Wudyka. The phantom stock describes the value of “stock” that does not exist. It is what the stock value would beif the company were publicly traded.

‘Restricted’ and ‘Performance’ Stock-Based Plans

Restricted stock plans place a restriction upon the executive, usually to fulfill an agreement to receive a stock payout. For example, staying with the company until a designated date in future.

Performance stock plans require executives to meet a performance goal. For example, stock price rises above a certain level, or the company beats an industry in some measure of performance or stock price, etc.

If you are implementing plans like this for the first time, be aware of potential tax and accounting implications, says Wudyka. If you are uncertain about these, always consult internal or external tax and legal resources before finalizing your plan.


Hard to get to real data and meaningful comp comparisons? Good news, now there’s Compensation Analyzer to help you compare your pay systems to those of other employers in your industry and region. Find out more about the Compensation Analyzer.


“Predicting” Executive Base Pay

Regression analysis is commonly used as a technique to predict base pay level for executives, says Wudyka. Analyzing pay survey data with regression analysis typically shows that there is a high correlation (about .7) between company size and pay levels. This means that 70% of the variation in base pay can be “explained” by the variable of revenue.

Adding other variables often helps to “explain” the other 30%, leaving you with a highly accurate guide for base pay.

Comp—from the mailroom to the C=-suite, it’s never easy, but now it’s more manageable than ever:

Announcing a Major Advance in Compensation Management!

Compensation.BLR.com now includes a brand new management tool—Compensation Analyzer—that compares your organization’s pay scales, grades, and salary offers against those of other employers. Plus you get instant access to built-in job descriptions, industrial classifications, geographic comparisons, employer size variables, and much more.

The BLR Compensation Analyzer delivers the hard numbers you need to retain top talent, make smart and defensible decisions, and control payroll expenses.

  • Evaluates your pay rates to ensure they are competitive
  • Compares your pay scales, grades, and salary offers against those of other employers
  • Benchmarks your jobs to BLR survey data to see how they compare in different demographic slices (industry, employer size, geography)
  • Automatically computes ratios, such as compa-ratios and penetration ratios
  • Sorts and filters salary data just the way you want it
  • Identifies flight risks and provides the data to support the assessment
  • Exports data to your documents and spreadsheets for formatting and reporting
  • Adds data from other surveys and use to compare in a single, easy-to-use report

Plus with Compensation.BLR.com you can:

  • Price jobs with the Salary Finder
  • Manage and create job descriptions
  • Calculate turnover cost
  • Access all services 24/7 from any computer, anywhere in the world
  • Keep up with constantly changing compensation and benefits best practices

The Compensation Analyzer was designed for easy startup. Add your job titles, rate ranges, and departments via a simple interface.

The Compensation Analyzer produces reports to back up every decision. Compare employee pay


Is your compensation system managing you?  Check out BLR’s new Compensation Analyzer to see how you can get back in control. Find out more about the Compensation Analyzer.


Is My Employee Salary and Other Data Secure?

“Is the data secure?” is the first question compensation managers ask in evaluating a comp management system. Yes, data you enter into the BLR Compensation Analyzer is fully secure. We use SSL (Secure Socket Layer) to encrypt information passing between your computer and our server which stops unauthorized access. Your access is protected via a unique username and password, so there’s no chance that another party will be able to see it.

Have a question or need help?
Email us at CompAnalyzer@BLR.com or call 1-800-727-5257.
Ask for a "Compensation Analyzer Consultant."

2 thoughts on “Perks, Imputed Income, and Phantom Stock—Exec Comp’s Tools”

  1. Hey Sam. First off. That was a very nice description. I’m a lesbian and well…I had fun reading that but anyways, I think your friend definitly likes you/is sexually attracted to you, otherwise she wouldn’t touch you and hold your hand or anything. She is just afraid to admit it, which is common. She needs time, don’t rush into anything. Just cherish what you guys have now.

Leave a Reply

Your email address will not be published. Required fields are marked *