The third , an increasingly more common approach, is a Reward and Retention Program. We often call these IRR Plans, or Incentive, Retention, and Reward as they improve the overall IRR for the company as well. The goal of this plan is to create a program that will reward top talent for their productivity, while retaining that same top talent. There are two popular methods for rewarding and retaining executives, defined benefit plans and defined contribution plans. Defined benefit, as the title suggests, gives the executive a predetermined benefit that they are to receive in the future, assuming they remain with the company. Defined contribution, on the other hand, involves the company setting aside or contributing a certain amount for the executive now, without necessarily promising a particular benefit to be paid in the future. These contributions may be increased or decreased depending on different factors, such as company performance. Additionally, a more complex defined contribution plan may have the interest rate tied to key performance indicators within the company. A defined contribution plan such as this will be more complex than a standard defined benefit or contribution plan, as it combines the best of both. All three plans require legal documentation and a third-party administrator (TPA), but a more complex plan may need additional monitoring to accurately determine the contributions and amount of interest that should be accredited for a given period.​
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