Deferred Comp Approach Stems Tide

April 23, 2001 ( - Employers struggling to hang on to talented employees might find an intriguing example in a unique equity-linked deferred compensation plan used by Prudential Financial.

Prudential revealed details of the plan in its initial public offering (IPO) prospectus last week, acknowledging difficulty in hiring and retaining brokers. The financial services firm ended 2000 with fewer U.S. brokers and trainees than in 1999, according to Dow Jones.

However, in the prospectus Prudential told potential investors that it hopes to turn that around with Master Share, a voluntary deferred compensation plan that began last year. The plan invests brokers’ deferred compensation in a Prudential S&P 500 index fund.

Compensation experts say the program has been popular among Prudential brokers because they can buy into the fund at a 25% discount, and their investment vests in less than 10 years.

While many brokerage firms offer deferred compensation plans that vest in the company’s own stock over time, Prudential’s status as a private insurance firm precluded that option. What remains unsure is if employer stock will become an option once the IPO is completed.