STRATEGIC ISSUES

The globalization of the corporate marketplace has elevated compensation and benefit planning to a strategic corporate function. Multinationals recognize that maintaining a competitive advantage depends upon attracting and retaining key executives.

Historically, executives have relied on local social benefits and company pension plans. However, these local plans often provide low benefit ceilings, are not portable from country to country, and are often marred by high inflation. As a result, the local plans are not suitable for long-term benefit planning, are difficult to administer and create substantial benefit shortfalls for executives. This is particularly evident in the area of survivorship benefits and retirement income.

In recognition of income shortfalls, some companies have promised to pay a supplemental survivorship benefit to the executive’s family or to provide supplemental income to the executive at retirement.