Executive benefits consulting firm, Fulcrum Partners LLC, is pleased to distribute this AALU Washington Report to its clients and friends. This continuing series of articles is intended to provide deep insight into trends, events, and issues that impact the design and operation of nonqualified executive benefit plans. To read other similiar articles, visit the Fulcrum Partners blog at www.fulcrumpartnersllc.com/news. Fulcrum Partners LLC is one of the nation’s leading and largest executive benefits consultancy. Its consultants focus on an integrated approach to the design, financing and plan administration of executive benefit programs.

1. NONQUALIFIED
DEFERRED
COMPENSATION
Asking the question:
Do your company’s plans
REALLY work?

2. 2
NONQUALIFIED
DEFERRED
COMPENSATION
Do your company’s plans really work?
92% OF THE
FORTUNE 1000 OFFER A
§409A NONQUALIFIED
DEFERRED COMPENSATION
PLAN TO KEY EXECUTIVES.
And §409A Nonqualified Deferred
Compensation (NQDC) can be
the most versatile pay element
of Total Rewards.
Yet for many, NQDC is the
FORGOTTEN pay element.
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Having a “plan” does not necessarily mean
you have your best “strategy.”

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DO YOUR COMPANY’S PLANS REALLY WORK?
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A strategy means
that Fulcrum
Partners has
tested variations of
plan designs with
your unique needs
in mind.
… We measure
inputs.
… And we analyze
outcomes.
A plan shouldn’t be casually selected
… as if you picked it off the shelf.

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CHART 1: RETIREMENT COMPENSATION SUMMARY: CEO
DO YOUR COMPANY’S PLANS REALLY WORK?
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CEO A
CEO B
CEO C
CEO D
CEO E
CEO F
CEO G
CEO H
CEO I
CEO J
CEO K
CEO L
Company contributions, as a percentage of salary, to all qualified and
nonqualified retirement plans. Real data regarding a sampling of 12
companies, all within the same industry.
Why do these numbers vary so much from one executive to the next?

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CHART 2: CAREER RETIREMENT BENEFIT: RETIREMENT INCOME
REPLACEMENT RATIO (RIRR) CEO
Annual lifetime income replacement, as a percentage of projected final total
cash compensation (salary plus bonus), created by company contributions to
all retirement plans, assuming target performance.
DO YOUR COMPANY’S PLANS REALLY WORK?
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CEO D
CEO A
CEO C
CEO L
CEO E
CEO B
CEO J
CEO F
CEO H
CEO K
CEO I
CEO G
Clearly … some companies treat retirement as a significant pay element
… while other companies have no strategies at all.

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QUESTIONS YOU MUST ASK
DO YOUR COMPANY’S PLANS REALLY WORK?
SM
What is your CEO’s projected retirement income replacement ratio
(RIRR)?
Why is it what it is?
What should it be?
Does your CEO’s
projected RIRR
reflect your overall
compensation
strategy?
What about your
other key
executives?

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DO YOUR COMPANY’S PLANS REALLY WORK?
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CONSIDER CORPORATE OBJECTIVES
COMPANIES HAVE MANY REASONS TO USE DEFERRED OR FUTURE
COMPENSATION.
Drive performance.
Drive corporate messaging.
Incentivize and retain new hires.
Replace lost benefits (“make whole” arrangements) for new hires.
Improve employee morale.
Award spot bonuses or special project bonuses.
Manage compensation subject to clawback.
Incentivize employees to accumulate company stock on a tax
preferred basis.
Supplement existing retirement programs and Social Security.
Facilitate financial wellness, creating consistency with other
companies’ initiatives.
And inspire retention … which is a reflection of loyalty.

8. 8
DO YOUR COMPANY’S PLANS REALLY WORK?
SM
RETENTION
… a of loyalty.
Loyalty occurs when the needs of both parties are satisfied.
Deferring income is an act of trust and faith between the company
and the employee.
Employers and employees who partner for their common
interests, achieve strategic success through effective plan
sponsorship.
Loyalty from employer to employee.
And from employee to employer.

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Retirement security.
Financial wellness.
Flexibility to handle financial uncertainties.
Employees today
face many financial
insecurities.
Increasing
numbers of
workers
postponing
retirement beyond
age 65.
70% of workers
planning a second
career after
retiring from their
first one.
And most
depending on
Social Security
and employer
sponsored plans
alone.
CONSIDER EXECUTIVE OBJECTIVES
DO YOUR COMPANY’S PLANS REALLY WORK?
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Rule of Thumb: Annual retirement income
TARGET X 20 = RETIREMENT SAVINGS TARGET.
For example, to have $100,000 in annual cash flow
at retirement, you need savings of $2,000,000.

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Employers want maximum performance from executives.
Employees want incomes, retirement security, tools for saving,
tools for retirement, and partnership with their employer.
DO YOUR COMPANY’S PLANS REALLY WORK?
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CONSIDER MUTUAL OBJECTIVES
IRS CODE §409A impacts both corporate and executive objectives. Both
organizations and executives must look at deferred compensation as
part of Total Rewards, asking: Why? And, how does it benefit me?

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WHO IS IMPACTED MOST WHEN YOUR COMPANY’S
PLANS FALL SHORT?
NOT THE CORE EMPLOYEES
NOT THE C-SUITE
Your Core Management Team is at greatest risk.
In general, employees in this group are:
Over the Social Security wage base.
Limited in qualified plan contributions.
Missing out on the C-Suite incentives.
DO YOUR COMPANY’S PLANS REALLY WORK?
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THE MOST SIGNIFICANT IMPEDIMENT TO WEALTH IS TAXES.

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DO YOUR COMPANY’S PLANS REALLY WORK?
CONSIDER THE GAP
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Today’s tax qualified retirement plans and social programs, for the most
part, adequately provide for the worker earning $90,000 and under.
However, those earning over the social security wage base of $113,700
start losing benefits. Additionally, tax qualified plan limits do not allow those
employees to save enough for a comfortable retirement.
The most efficient way to address this issue is to supplement the 401(k) with
a §409A plan. A §409A plan affords your core management team the same
opportunity to provide for retirement as your core employees receive.
A §409A plan can complement the 401(k). A §409A plan, with an egalitarian
design, goes a long way in neutralizing the impact of reverse discrimination
in retirement planning.

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Many companies demonstrate a commitment to employees in health
and wellness.
Extending that commitment to financial wellness through a non-
qualified strategy is LOGICAL.
Install an Executive Partnership Plan utilizing §409A.
Sponsors who partner with key employees; discover the win-win.
A well-strategized nonqualified deferred compensation plan is not a
product you buy off a shelf. Instead, it is a customized strategy designed
for your needs and your future. NQDC plans are the most effective, tax-
efficient, wealth-accumulating vehicles for highly compensated executives.
If you don’t have a plan, you need one.
If you do have a plan, let Fulcrum Partners review it for you.
MAXIMIZE UTILITY FOR BOTH THE PLAN SPONSOR …
AND THE PARTICIPANT.
WORTH REPEATING:
A NONQUALIFIED BENEFIT STRATEGY IS THE
MOST VERSATILE PAY ELEMENT WITHIN TOTAL
REWARDS.
SUMMARY
DO YOUR COMPANY’S PLANS REALLY WORK?
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14. 14
FULCRUM
PARTNERS
LLC
LEADERSHIP IN INTEGRATED
EXECUTIVE COMPENSATION
In every industry, there is a leader … a
distinctive expert that stands above all
others. When the industry is executive
benefits consulting and you are seek-
ing the true experts in integrated ex-
ecutive compensation, that leader is
Fulcrum Partners.
Leadership, understanding, creativity,
and accountability, all validated by
knowledge and wisdom—this is the
value proposition the specialists at
Fulcrum Partners intend to bring to
every client relationship. Energizing
synergistic strategic alliances in order
to help fulfill each client’s specific
needs, the team at Fulcrum is trusted
by many of the biggest names in busi-
ness today, including both publicly
held and large private companies.
CORE COMPETENCIES OFFERED
BY THE PROFESSIONALS AT
FULCRUM PARTNERS:
■Executive Benefits Consulting
■Executive Benefit Benchmarking
■Benefit Financing Strategies
■Executive Wealth Management
■Institutional Investment Advisory
EXPERTISE IN THE SERVICES
YOUR ORGANIZATION NEEDS
Fulcrum Partners, LLC was founded
in Ponte Vedra Beach, Florida, in
2007, by four former senior consult-
ants of the Executive Benefits Division
of Clark Consulting. Today Fulcrum
Partners has grown to a team of 15
partners and serves its clients with
more than 200 years of combined
professional experience.
Our partnerships with hundreds of
public and private companies
throughout the country position us
to help our clients in areas beyond
executive compensation and benefits
consulting. We provide consultation
and coordination in specialized areas
of broad-based employee benefit pro-
grams, focusing on areas for improved
efficiencies and effectiveness in the
employee benefits market.
CONTACT:
Fulcrum Partners LLC
818 A1A North, Suite 304
P.O. Box 1909
Ponte Vedra Beach, FL 32004-1909
904.296.2563
press@fulcrumpartnersllc.com
©2013 Fulcrum Partners LLC
SM
©2013 Fulcrum Partners, LLC. No part of this may be reproduced by any means without
the express written permission of Fulcrum Partners LLC.
Securities offered through Registered Representatives of ValMark
Securities, Inc. Member FINRA, SIPC, 130 Springside Drive, Suite
300, Akron, OH 44333-2431, Tel: 1-800-765-5201. Investment
Advisory Services offered through ValMark Advisers, Inc., which is
an SEC Registered Investment Advisor. Fulcrum Partners LLC is a
separate entity from ValMark Securities, Inc. and ValMark Advisers,
Inc.

15. 15
Contact:
Fulcrum Partners LLC
818 A1A North, Suite 304
P.O. Box 1909
Ponte Vedra Beach, FL 32004-1909
904.296.2563
© 2013 Fulcrum Partners LLC
SM
Securities offered through Registered
Representatives of ValMark Securities, Inc. Member
FINRA, SIPC, 130 Springside Drive, Suite 300,
Akron, OH 44333-2431, Tel: 1-800-765-5201.
Investment Advisory Services offered through
ValMark Advisers, Inc., which is an SEC Registered
Investment Advisor. Fulcrum Partners LLC is a
separate entity from ValMark Securities, Inc. and
ValMark Advisers, Inc.