Data & Research January 9, 2007

Admired Companies Love NQ Plans

Nearly all (92%) of the 276 US companies described as “most admired″ offer a non-qualified plan in their executive benefit package, according to a study by the Todd Organization.
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The Greensboro, North Carolina-based executive benefit consultant also found that 86% of companies offer voluntary deferred compensation programs; 64% offer one or more supplemental executive retirement plans (SERP); and 81% provide a company contribution to at least one plan. The consultant looked at shareholder proxies and other public documents from the public firms given the “most admired” title by Fortune Magazine.

According to the Todd Organization’s study, types of non-qualified benefits and the number of “most admired’ firms offering them were:

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Deferred Compensation

  • Voluntary Deferrals, 86%
  • At Least One Company Contribution, 65%
  • 401(k) Match Restoration, 48%
  • Fixed Rate with Yield above Statutory Rate, 18%
  • Company Stock is One of Choices, 15%

Defined Benefit SERP

  • Annual Accrual-Based Formula, 47%
  • Target Benefit Formula, 16%
  • Fixed Amount Formula, 4%

Account Balance SERP

  • Cash Balance, 11%
  • Formula-Based Discretionary Contributions, 2%
  • Other Discretionary, 2%

“Today more than ever companies want to be able to benchmark their executive benefits programs and know where they stand in relation to peers and competitors,” said Ward Russell, president of The Todd Organization, in the news release. “It has been our experience that well managed companies see properly structured and well managed non-qualified retirement plans as an important tool that can help to cost effectively retain quality executives while boosting shareholder value.”

Founded in 1957, The Todd Organization offers consulting in the design, financing, and administration of non-qualified retirement plans and other executive benefits. More information is at http://www.toddorg.com.

The Markets January 9, 2007

Emerging Markets Best Performer in 2006

The world’s emerging and developed markets continued to stay in positive territory in December, making a full year of positive results as oil prices remained low, Standard&Poor’s said.
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A Standard & Poor’s news release said emerging markets gained 5.44% in December, while developed markets were up 1.97% for the month. Developed market returns (+20.63%) trailed that of emerging markets (+38.56%) in 2006.

In December, 24 of the 27 developed markets posted an average gain of 4.29%, with declines in Canada (-0.54%), Iceland (-0.35%) and South Korea (-0.01%), according to the news release. The emerging markets posted gains in 22 of the 26 markets with an average gain of 6.3%. The emerging markets had more pronounced dips: Israel (-1.53%), Jordan (-3.00%), Pakistan (-6.40%) and Thailand (-9.24%).

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For the year, all 27 developed markets were up an average of 35.15%, while 23 of the 26 emerging markets headed north by an average of 45.46%. The lagging markets during the year included Israel (-3.46%), Jordan (-35.56%) and Turkey (-2.04%).

Examining the market by sectors, eight out of the 10 showed were positive in December, with Telecommunications as the best-performing sector gaining 3.65%, and Energy as the worst with a 1.47% decline. At year-end 2006, Utilities was the best sector with 36.92%, while Information Technology was the worst at 9.49%.

A full copy of the S&P/Citigroup World by Numbers Report for December is at www.standardandpoors.com/indices.

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