Retention of Key Executives
Situation
A 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 private company through some difficult years. The owners requested assistance with the design of an equity-based compensation program for non-family executives.Process
D.G. McDermott Associates consultants sought first to understand the company’s long-term business goals, strengths and weaknesses, and critical success factors. We facilitated several strategic planning retreats with the five top executives of the company, which included both family owners and non-family executives.Solution
DGM identified several critical areas to be addressed, including sales, marketing, operations, and pay practices. We then 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 achieving 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