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sloble@crowleyfleck.com

Fiduciary Compensation

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The chairman of a MEWA/VEBA Board of Trustees spends 5-10 hours per week on plan management matters and his co-trustees want to compensate him $2,000 per month from trust assets. He does a critical job and has served the trust 7 years without pay (no back-pay is sought).

The legality is sound in that he is not employed by any employer or union participating in the plan and is not employed by the association - He receives full-time pay from a non-participating employer group. He is completely removing himself from this discussion (other than answering the question of how many hours he devotes to the trust on average).

QUESTION: Any thoughts on how the trustees should benchmark and document this?

$2,000 would be $100/hour on a slow month which seems high...

Thanks in advance!!

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The chairman of a MEWA/VEBA Board of Trustees spends 5-10 hours per week on plan management matters and his co-trustees want to compensate him $2,000 per month from trust assets. He does a critical job and has served the trust 7 years without pay (no back-pay is sought).

The legality is sound in that he is not employed by any employer or union participating in the plan and is not employed by the association - He receives full-time pay from a non-participating employer group. He is completely removing himself from this discussion (other than answering the question of how many hours he devotes to the trust on average).

QUESTION: Any thoughts on how the trustees should benchmark and document this?

$2,000 would be $100/hour on a slow month which seems high...

Thanks in advance!!

How much per hour is his time worth?

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How much per hour is his time worth?

To phrase it another way, what is the value of his services to the trust?

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Well, he is a specialty physician (as are all the trustees) so his time, to his fellow physicians, is worth about $600/hour. They think $2,000 per month is very cheap. But Mojo phrased it spot on: they need to determine his value to the trust. It is not relevant what he earns in his day job.

Reprasing my question to this Message Board - What are some options for determining trust chairman service value, i.e. through benchmarks, comparisons, and documetation? Also this trust has about 3million in assets running well with about $300k in surplus.

I am looking for specifics (even references) for independent consultants, institutional fiducairies for comparison, specific formulas you have seen or used, etc.

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