2022 Marcum National Construction Survey

The recruitment of technical talents is our biggest obstacle.” – SURVEY RESPONDENT

A deferred compensation plan can help solve this challenge. These plans are only offered to key executives (direct reports to the CEO and other important decision-makers like project managers, superintendents, and estimators) who play a vital role in keeping your business running. Deferred compensation plans are designed to motivate leaders to hit certain targets, with compensation beginning upon achieving the goals. Here’s roughly how it works: • If the company hits a goal (i.e., certain revenue targets, profitability levels, and/ or completion of key projects on time and on budget), the executive will be entitled to payment. • The payment is made after the goal is met — but the payment is deferred for a period, or is paid out over a number of years. • The executive must be on the payroll on the date the payment is scheduled to be made.

This plan motivates executives to help your company reach long-term goals and incentivizes them to stay after completion. The retention effect comes from losing the deferred payments if the executive is no longer working for the employer. If the executive is interviewing for a new job, they might ask the prospective employer to compensate them for any potential forfeited program amounts. That could make the executive too expensive for the prospective employer to hire. This type of program is flexible (you don’t have to use the same goals or reward amounts for all executives), and the employer receives a tax deduction when the executive is paid. It’s important to build a plan based on your company’s specific needs, goals, and executive staff. Marcum has deep expertise and experience in executive compensation and can help create a plan that not only retains key personnel, but also drives results by matching company goals to compensation. Contact us to get started.

2022 MARCUM NATIONAL CONSTRUCTION SURVEY 32