Our Annual Sponsors:

Cementing Key Employee Relationships

in

Difficult Economic Times

May 19, 2009

Presenters:

William WhiteGeneral Counsel

Thomas Brady & Associates

Robin SchellSenior Counsel & Partner

Jackson, Jackson & Wagner

Goal: Cementing Key-Person Relationships…

Now is the time to refine compensation plans:…Secure Deductions…Create Incentives…Reduce Costs… Non Deductible Deductible More Admin Costs Less Admin Costs

-Deferred Compensation Plans (§409A)-Deferred Bonus Plans (§409A)-Phantom Stock Plans (§409A)

More costly to set up, maintain and monitor. Subject to ERISA

Subject to Rights of Company Creditors

Employer Owns the Asset(s) that fund the plan

Can only cover Highly Compensated Key-People

-Restricted Bonus Plans (§162)-Incentive Bonus Plans (§162)-Group Life (§79)

Less costly to set up, maintain and monitor. Minimum ERISA coverage

Not Subject to Rights of Company Creditors

Employee Owns the Asset(s) that funds the plan

Can cover all Key-People

-Restricted/Incentive Bonus Plans (§162)

Group Life (§79)

- All employees receive $50,000 of group term life coverage tax free:

Employee simply elects in

Deductible? YESTaxable? NOFICA/FUTA? YES

-Key Employees receive permanent (cash value) life Coverage tax preferred:

Key Employee simply routes premium of any existing policy (or new policy) through the §79 Plan

Deductible? YESTaxable? PARTIALLYFICA/FUTA? YES

- Key Employees Under $106,500:Employer makes deductible, incentive-based bonus into a Restricted:-Investment Account-Life Insurance Policy or

-Annuity

-Employee owns the account-To avoid FICA/FUTA on the Bonus the Acct must be (i) Restricted until Death and (ii) Be in Life or Annuity Policy

Deductible? YESTaxable? YESFICA/FUTA? NO

-Key Employees Over $106,500: Employer makes deductible, incentive-based bonus into a Restricted:-Investment Account-Life Insurance Policy or

-Annuity

-Key Employee owns the account-Account may be restricted until benchmarks or years of service are met-Restriction is optional

Deductible? YESTaxable? YESFICA/FUTA N/A

Cementing Key Employee Relationships In Difficult

Economic Times

Presented By: Robin Schell, APR, Fellow PRSAJackson Jackson & Wagner

Why Communicate With/Motivate Employees?

• Most credible sources of information

• Most important resources to achieve competitive advantage

• Fear of not knowing is worse than knowing the bad news

Understanding Environment in Which They/(Us) are Living

• Lack of information & understanding

• Bad news! (Stock Market, Layoffs etc.)

• Media sensationalizes

• Advanced technology & 24/7 news environment

• Leaders don’t have all the answers

• Expectations of transparent communication

• Turf protection vs. support

Research First

How do we find out what employees are thinking, feeling, doing?

– Formal and Informal Research– Word-of-mouth/Grapevine/Social Media– Behavior: do they stay or do they go?

High Anxiety, Concerns , FearLow Anxiety, Concerns, Fear

Strategy:• High Touch• Secure and Hold• Isolate and Solve• Management as communicator• Objectives FocusTactics:• Face-to-Face• One-on-ones• Education: financial, stress mgmt• Cheerleading w/o spin• Small steps on critical goals• Customer Service Strategies• Employee Action/Role (ambassadors)Message Strategies• Reality w/o fear – calming• Transparency• Education

Strategy:• Traditional but continuous comm. • Monitor and respond• Isolate and Solve• Supervisor as Communicator• Goal focusTactics:• No new methods but increase frequency• Research – dipstick, opinion leaders• Workshops: financial, stress mgmt, • MBWA senior management• Goals that contribute to bottom line (energy savings, customer service)• Employee Action/Role (ambassadors)

Message Strategy:•What makes a difference• Reinforce what is going right• Productivity & performance• Role of employee as ambassador

Economic Crisis Communication Strategy

Examples of What’s Being Done Now

• Actions Speak Louder: Cutting Expenses Before Jobs-- Starbucks CEO salary drop, $1.2 million to under $10,000/yr.

-- Motorola’s freeze on pension plans/401K matches (plus CEO salary cuts)

-- Fed-Ex base salary cuts for CEO & senior execs

• “Invertising”: internal buzz-building campaigns-- PepsiCo, Coke

-- Make sure internal & external messages are consistent!

Examples of What’s Being Done Now

• Stay true to organizational values

-- IBM: 1st line manager communication; severance; 1st dibs on internal openings

• Engage employees in selling the organization

-- HFHS: employee referral program

COMMUNICATE…COMMUNICATE…COMMUNICATE!

Employees As Ambassadors

• 5% Hand-picked

• 10% Self-Selects

• 85% Everyone Else

Employees As Ambassadors

• Place employees on Boards

• Develop a proactive speaker’s bureau

• “Message of the Month”

• Engage them in a social responsibility project: original or with partner organizations

Employees As Ambassadors

• 10 Most “Frequently Asked Questions”

• Feedback Systems – What are they hearing out there?

• Goal-driven programs (e.g. Referral Program)

Top 9 Recommendations

1. Be a transparent organization 2. Educate so they understand! 3. Set goals – connect personal w/organizational4. Involve and engage all levels of employees…

make it part of the culture!5. Spotlight the role models6. Train your spokespersons7. Support everyone in the company – no turfing!8. Coach the visionary for the organization9. Communicate, communicate, communicate

Please mark your calendars for our next meeting!

September 15, 2009

For More Information, Contact Our Speakers:

Thomas Brady & Associates

http://www.tbradyandassociates.com/

William White, General Counsel(617) 266-0019

Jackson Jackson & Wagner

www.jjwpr.com

Robin Schell, APR, Fellow PRSA

(603) 770-3607