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This is financial advisor, Patrick Munro, discussing what is a defined benefit program.
Under IRS rules governments have gotten rules out there whereby companies can take their
executives and highly compensated employees in a company, and give them a level of compensation,
that is well, shall we say, a higher level than the workers in the company. It is a way
to retain high value staff and there is special rules for defined benefit programs. The program
has to be administered by a governmental agency and, the benefits have to be legal of course.
And, usually in step with the individual's responsibility at the company. Some of these
plans are very lucrative and, designed normally on the performance of the executive, from
taking the company from a position of profit to a position of greater profit, and many
times stock options are involved, and things of this nature. This is Patrick Munro, discussing
the benefits of defined benefit programs.