EXECUTIVE SALARY CONTINUATION PLAN
Published on September 4, 1998
EXHIBIT 10.8
EXECUTIVE SALARY CONTINUATION PLAN
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ELIGIBILITY All Vice Presidents of Korn/Ferry International
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EFFECTIVE DATE May 1, 1974
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DESCRIPTION OF PLAN
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The Executive Salary Continuation Plan will pay Korn/Ferry
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Vice Presidents a partial salary of $7,000 per year for the
five year period following retirement totalling $35,000 in
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additional compensation to supplement Social Security and
the existing Profit Sharing Plan.
In the event of the death of a Vice President before
retirement, this plan provides that the Vice President's
family will be kept on the Korn/Ferry payroll for a ten year
period, paying $10,000 to the family per year, a benefit
which totals $100,000.
This Salary Continuation Plan is provided in lieu of the
existing Excess Group Life Insurance Plan, which provides a
$50,000 death benefit in the event of death before
retirement and has no post-retirement benefits.
SIGNIFICANCE TO PARTICIPANT
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A. Current Benefits
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Korn/Ferry Vice Presidents will no longer incur the tax
burden they currently realize due to the taxable income
(economic benefit) they now report under the Group
plan. This will amount to a savings of $6,735 (or $337
per year) in taxes for an executive who is age 45 and
works until retirement.
B. Deferred Benefits
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Since the Korn/Ferry Vice President will receive
$35,000 in cash at retirement, this entire amount is an
increase over the existing plan.
Assuming a 45 year old executive is in the 40% marginal tax
bracket ($22,000 of taxable income) he would have to earn
an additional $1,270 per year and invest it at 8% gross
rate of return in order to equal the after-tax amount of the
Salary Continuation benefit at retirement.
C. Estate and Family Benefits
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As mentioned earlier, the executive's family will receive
$10,000 per year for a 10-year period in the event of death
before retirement.
The family may elect to take the commuted present value in a
lump sum if desired, although income tax considerations may
make this choice an undesirable one.
FUNDING
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Funding for this plan will be provided through insurance
contracts purchased by and owned by Korn/Ferry International on
the lives of participating officers. This will insure the monies
necessary to provide the plan benefits.
VESTING
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No benefits are vested and in the event of termination before
retirement, no benefits will be payable.
QUALIFICATION
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It is necessary for each participating executive to provide the
necessary medical information to the insurance carrier for the
insurance contracts to be issued. The existing group insurance
plan will remain in force until the new coverage becomes
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effective.
You will be contacted directly about the necessary data.
AGREEMENTS
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Plan specifications will be elaborated on in a separate Salary
Continuation Agreement which you will receive shortly.
COSTS
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The entire cost of the plan will be borne by Korn/Ferry
International and you will have no tax liability during your
working years.
TAXATION
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All plan benefits will be taxable income to the recipients as
received.
OTHER CONSIDERATIONS
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This Plan in no way effects the $70,000 Basic Group Life
Insurance coverage for each Vice President which will remain in
force. Only the Excess Group Life is being replaced.