Situation:
A privately (family) owned national wholesaler and distributor of gifts and novelty items was concerned about its ability to retain key non-family executives who stayed with the company through some difficult years. The family owners requested assistance regarding the design of an equity-based compensation program for non-family executives.
Process
As with all client assignments, D.G. McDermott Associates consultants wanted first to understand the company's long-term business goals, its strengths and weaknesses, and critical success factors. Toward this end, D.G. McDermott Associates facilitated a series of strategic planning retreats with the five top executives of the company, both family owners and non-family executives.
Solution
Based on these meetings, D.G. McDermott Associates identified several critical areas that needed to be addressed, including sales, marketing, operations, and pay practices. Consequently, it recommended the following:
- An initial grant of restricted company stock to the non-family executives to ensure retention
- Additional options to purchase company stock based on long-term company performance as measured by the attainment of specific net profit goals
- Short-term incentives designed to reward each executive for achieving specific financial and operational goals in their respective areas of responsibility
Outcome
Since D.G. McDermott Associates worked side by side with the key executive of the company in a team atmosphere, its recommendations were unanimously supported by all parties concerned and implemented.