Targeting and understanding the employee culture at any company is the most important factor in any successful incentive compensation program. A properly structured reward program will create timely and realistic targets resulting in incentives that will push key personnel to perform. For over thirty-six years, Harley Bjelland of the ERISA Law Firm has partnered with clients in crafting unique compensation programs that identify desired employee behavior and map out goals that will drive performance benefiting the employer’s bottom line.
Whether the vehicle is a qualified retirement plan, an equity program, an executive compensation plan or a bonus or a phantom stock plan, Mr. Bjelland starts with the desired result. Management knows what it needs and why it needs its key players to change the way they conduct business. Mr. Bjelland knows the tools the tax laws provide to achieve that target. Together we craft plans that stimulate new behaviors that result in short, medium and/or long term productivity.
For a medical device company, Mr. Bjelland and management created a matching contribution that is contingent upon positive increases to EBIDTA. The client had a 401(k) plan with a discretionary match. The client’s discretionary match was modified to provide four tiers of a matching contribution based upon the company’s Earnings Before Interest, Taxes, Depreciation and Amortization (“EBIDTA”). The client had many professional employees that had many job opportunities in the industry and a significant number of employees were leaving shortly after calendar quarters. Employees received quarterly bonuses and a number of professional employees would leave shortly after the last day of a calendar quarter (the target date for entitlement to the bonus). The matching contribution we adopted was calculated and paid only at the end of the year. Employees had to be employed on December 31 of the plan year in order to get the discretionary match. We launched the program with a series of employee education meetings that explained EBIDTA, the match and how they could impact EBIDTA and get the top tier match. Within a year the maximum match was attained, employee turnover was down 40% and employees stopped stealing pens and stationary.
Another client ran yogurt shop franchises. Management wanted to create long term incentives that stimulated long term growth. Turnover was a big issue. Not just for managers, but rank and file. With franchises, the incentive had to persuade various levels of employees to remain at least two to three years. Together we created a phantom stock program that created bonuses based upon the increase the value of the parent company. The phantom stock plan created an annual bonus based upon the value of the company’s stock. The bonus could be taken at the end of year one, year two or year three. Deferring the bonus to two or three years produced more economic benefit as the bonus would continue to increase with time as long as profits continued to grow. After two years, the client has reduced turnover by 28% and over half of the employees are deferring the bonus beyond one year.
While Mr. Bjelland is a benefits attorney, his best asset is his extensive experience running benefits as an employer. In his capacity as the partner in charge of benefits, Mr. Bjelland has administered and operated health and retirement plans both as a third party administrator and as a member of the benefits committee for four 100 plus attorney law firms as well as numerous small law firms. He has drafted thousands of plan documents for 401(k) plans and employee stock ownership plans. Mr. Bjelland has served as trustee for plans and has served as fiduciaries on numerous benefit plan committees and has conducted hundreds of audits by both the Internal Revenue Service and the United States Department of Labor. Mr. Bjelland has drafted thousands of non-qualified retirement plans and executive employment contracts. He has represented hundreds of large and small companies with 409A compliance, investment counseling and undoing questionable practices and listed transactions.
Representative clients include Alliance HealthCare Services, American First Federal Credit Union, American Reprographics Co., Inc., AmeriQuest Mortgage Company, Applied Medical, Astech Manufacturing, Inc., Bakersfield Memorial Hospital, Baron, Slovak & Empey, LLP, BE Aerospace, Inc., Beyond Blue Holdings, Inc., Brown & Streza, LLP, Bubba Gump Shrimp Co., Bridgford Foods, Inc., Careline, Inc., The Cherokee Indian Nation, Children’s Hospital of Orange County, CKE Restaurants, Inc., Coast Distribution Systems, Inc., Conexis, Corona-College Heights Orange & Lemon Association, Corinthian Colleges, Federal Deposit Insurance Corporation, Fidelity National Financial, Inc., First Team Walk-In Realty, Fonda, Hester & Associates, Freedom Communications, Inc., Gish Biomedical, Inc, Good Shepherd Lutheran Home of the West, Gordon & Rees, LLP, Hoag Memorial Hospital Presbyterian, Hobie Designs, Inc., Laguna Beach Festival of Arts, Microsemi Corporation, Millie’s, Inc., Musick, Peeler & Garrett, LLP, Municipal Water District of Orange County, Newport Corporation, Onyx Corporation, Orange County Fire Authority, the Orange County Employee’s Retirement System, Orthodyne Electronics, Inc., Pacific Bay Homes, LLC, Packard Hughes, Pleon Corporation, Powerwave Technologies, Meserve, Mumper and Hughes, Monarch HealthCare, Law Offices of Roger Neu, Law Offices of Roger Calton, Jackson, DeMarco, Tidus & Peckinpaw, Higham, O’Connell & Dunning, LLP, Precision Pet Products, Inc., Quest International, Inc., Tangram Interiors, Smith & Ellison, LLP, Saticoy Lemon Association, Stradling, Yocca, Carlson & Rauth, The TriZetto Group, Unit Instruments, Inc., Wonderware, Word & Brown, Yogurtland.