In a recent ESPN article (click HERE to read), there was a discussion of a compensation strategy for Jim Harbaugh, the head football coach for the University of Michigan.  With universities starting to run their sports programs more like businesses, it was just a matter of time before they began adopting strategies such as this to attract and retain key talent to their programs.

Here is what the University of Michigan is doing: the university is loaning Coach Harbaugh $4,000,000 in 2016 and an additional $2,000,000 per year for the following 5 years.  This loan is then contributed to a permanent life insurance policy.  As long as the policy is in force, Coach Harbaugh does not need to repay the loan until he dies.  At his death, the university will be repaid its loan and Coach Harbaugh’s family will receive the balance of the death benefit.

This example is one of many strategies that is used quite often in publicly traded organizations as well as private ones to provide an extra benefit to key employees.  Unlike health insurance, 401(k) plans and other benefits that must be provided to all employees, this type of plan can be provided to only select employees.

There are many ways to design incentive compensation plans for key employees, so if you are interested in exploring the options available, please reach out to someone on the Continuum Planning Partners team.

 

Andy Faught and Brad Burcham are registered representatives of and offer Securities, Investment Advisory and Financial Planning Services through MML Investors Services, LLC, Member SIPC, 12 Cadillac Drive, Suite 440, Brentwood, TN  37027 (615) 309-6300.  Continuum Planning Partners is not an affiliate or subsidiary of MML Investors Services, LLC or it affiliated companies.   CRN201810-205453

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Andy Faught, CFA, CPA & Brad Burcham

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