Key Employee


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Key Employee

A very important employee. A key employee may have contacts highly beneficial to the company, may work hard and generate more revenue than any other employee, or may have some other skill that would be difficult or impossible to replicate in another employee. Often, but not always, a key employee is a manager. A company may purchase key person insurance to protect itself against the possibility that an employee may unexpectedly die or become unable to work, which would deprive the company of his/her skills.
References in periodicals archive ?
Answer--A national bank may purchase key employee life insurance for the benefit of the bank if the bank has an insurable interest in the key employee's life.
Whatever the method, Garavatti and Westphal agree that the dollar value of a key employee is something to be decided with the guidance of the company's accounting and legal advisors.
HOW TO BRING ITUP WITH AN EMPLOYER: "Recent research suggests that, in addition to providing monetary benefits for key employees, helping them save money for retirement on a tax-efficient basis helps with retention.
The other 99% interest is owned by the top key employees (no voting rights), as limited partners.
The cash portion is aimed at covering taxes and tax-related costs arising from the reward to key employees. Dividends and other potential distribution of assets paid during the vesting period will be compensated to the key employees in connection with the reward payment.
Executive benefits in the SMB market are not a money grab or a greed sale; they are simply a way for employers to help their key employees fill financial gaps.
Sales to key employees often make sense when the owner has no partners or children who are interested and qualified to assume ownership responsibilities.
I encourage my clients to have a personal board of directors (e.g., a CPA, attorney, life insurance agent, owners, key employees), in addition to any applicable board of directors, to act as a sounding board and to help their successors run their businesses.
(47) Under a typical nonqualified defined-benefit deferred-compensation plan, a company promises to pay a key employee on retirement, disability or death, 50% of his or her average annual compensation for the five years preceding the year in which the triggering event occurs.
Global Banking News-August 9, 2019-Glaston's board resolves on incentive plan for key employees
Key employee incentive plans should be designed so that key employees will be able to immediately partake in some of the value they helped create (cash year-end award) yet incorporate a retention component through an intentional vesting schedule (deferred award) that retains the employee long term.
These policies have been called "key man" insurance, but today a more apt description is "key person" or "key employee" coverage.