Page 584 - Bruce Ellig - The Complete Guide to Executive Compensation (2007)

570 The Complete Guide to Executive Compensation

Example You Your Factor

Increase in Annual Salary $1,000 $
Increased Benefit Coverage Multiplier
Basic life insurance 2 $2,000
Supplemental life Insurance (1) 0–3 3,000

Business travel (2) 6 6,000
Disability—short-term (3) 0.5 500
Disability—long-term (4) 12.5 6,250
Year to 65 [25] 0.5
Savings and investment plan 3,125 $3,125
Year to 65 [25] 0.125

Contribution Multiple Contribution Multiple
10% 0.125 5% 0.075
9% 0.115 4% 0.060
8% 0.105 3% 0.045
7% 0.095 2% 0.030
6% 0.085
Retirement plan(5) 0.35
Years to 65 [25] 3 0.014
Life expectancy factor 15
Retirement factor [52.5] $52,200

(1) Depends on coverage elected. Example employee has three times salary and is not affected by $500,000 maximum.
(2) Amount six times salary (maximum benefit of $250,000). Essentially, an individual earning $41,667 per year or less will have an increase.
(3) May be eligible for more but assumes long-term disability applies after six months.
(4) Includes social security benefit to a maximum annual benefit of $36,000 (pay $72,000 or less).
(5) Your benefits may be greater than this if the integrated formula is applicable.
Increased Benefit Cost Per Year Example You
Basic life insurance, $1.10 per $1,000 $2.20 $
Supplemental life insurance per $1,000
from Section 79 tables by age $3.30
Business travel 0 0
Disability—short-term 0 0
Disability—long-term 5.00
Increase in compensation over $18,000
but less than $72,000 0.005.
Saving and investment plan increase
1,000 10% contribution free 100.0
Retirement plan 0 0
Total annual employee cost $121.20
Table 9-27. Employee benefit pay increase worksheet