Corporate Strategies Group
The Gottlieb Organization’s roots date back more than 60 years through predecessor entities providing financial counseling, insurance strategies and wealth management services in creative, sound ways.
The Gottlieb Organization (“TGO”) was formed to bring together numerous companies and disciplines founded and acquired over the past seven decades by the Gottlieb family, while continuously serving our clients through innovative ways to build, protect, transfer and insure client wealth. After more than a half-century of consulting to some of America’s wealthiest families and largest companies, our work continues to be delivered according to our basic principles. Whether serving high and ultra-high net worth families or privately held or publicly traded companies, we conceive, design, implement and administer programs to build, protect and transfer wealth.
We established the Corporate Strategies Group (“CSG”) in 2014 to create a specific focus on the solutions that our CSG team has delivered in their more than 150 years of combined experience in helping corporate clients address human resource challenges. From executive benefit plans to broad-based unfunded human resource liabilities, we have been there. Our early stage work included what is now known as benefits finance, forming and administering the first Rabbi Trust to be triggered, being awarded a process patent on funding and financing of post-retirement benefit obligations under what became known as PBOPs (Post-employment Benefits Other than Pensions) and accounted for under SFAS 106. Considering and listening to client issues and having a deep understanding of the technical perspectives of the law, tax, accounting, actuarial science, human resources and finance is a hallmark of our work. When the Rabbicular Trust was invented or, more recently REAL Solutions℠ (Repurchasing ESOP Accumulating Liabilities) was developed, senior members of TGO’s Corporate Strategies Group were at the fore. Listening. Innovating. Implementing and serving our clients.
In 2013 we began our journey into the world of ESOPs, a sector of Corporate America with an estimated $1 trillion comprising the value of ESOP companies. We addressed what has been purported to be more than $800 billion of unfunded ESOP Repurchase Obligations (“EROs”). We successfully designed and implemented a plan for an ESOP client. This plan, a benefit financial solution, is now the subject of a patent filing on REAL Solutions℠ and related IP. The TGO team has successfully filed for patents to protect our intellectual property since 1992, when our first patent was awarded. Our work in addressing ESOP liabilities has expanded to Seller Notes, retention of key staff and melding pre-ESOP plans to post-ESOP reality.
CSG team leaders are recognized thought leaders in the benefits industry, authoring several books and numerous articles as well as speaking publicly on benefit topics.
A major area of difficulty within an ESOP organization is the concern regarding the ability to meet its ESOP Repurchase Obligations (EROs). We developed REAL Solutions℠ (Repurchasing ESOP Accumulating Liabilities) to remedy that concern.
Every ESOP-owned company – whether a C- or an S-Corporation – will eventually have to address the repurchase of the ESOP trust-owned company stock under the Internal Revenue Service Code; no flexibility in such requirements is available. An ESOP’s right to “put” its stock holdings for repurchase by the company is certain and is referred to as the ESOP Repurchase Liability.
Quite simply, we believe that there are no better alternatives to address and solve EROs. REAL Solutions℠ is poised to become a core solution for Employee Stock Ownership Plans as the means by which to address a growing concern of ESOP trustees, company founders and employees.
REAL Solutions℠ was created by utilizing our financial strategy embodied in levered cash value life insurance, coupled with deep and broad technical expertise with an overlay of listening to clients while being nimble and creative.
Mature ESOPs that have not pre-funded EROs have encountered significant and severe problems, sometimes bankrupting long-standing companies. There may be instances where pre-ESOP owners have a meaningful ongoing interest in the company such as notes or stock warrants and are involved in the repurchase liability. If the ESOP-owned company is an S-Corp, then the pre-ESOP owners may be subject to a synthetic equity test. REAL Solutions℠ is designed to address synthetic equity issues.
Our patent-pending strategy that addresses these issues is designed to achieve a result favorable for the ESOP, the company and the plan participants. REAL Solutions℠ is considered among sophisticated ESOP advisors to offer a cutting-edge solution based on a time-tested informal funding plan that solves these issues. REAL Solutions℠ is tailored to each specific circumstance and objectives, limitations and timelines.
Benefits for Life℠
In 2006, we were approached by two unrelated parties within a few months of one another to address a benefit problem for a large US business organization. After each of these parties failed to get the attention they sought, we approached leadership of this organization with more than 10,000 employees and asked questions. Originally introduced to support specific product offerings, it became clear to us that each had failed to understand and embrace client issues. We were retained to develop a solution. After doing so, we successfully passed through layers of management to implement the plan. This was achieved after more than two years of development, re-tooling with and for the client, then negotiating arrangements with several intertwined by us financial institutions. Our patent pending Benefits for Life solution is expected to finally receive patent approval in 2015, but remains patent pending in the interim. The economic crash in 2008 terminated the implementation at that time. With the financial world in a much different place, 2014 initiatives suggest that implementation of one or two of these programs is likely in 2015.
Benefits for Life℠ is an example of the long process, deep thought and creative application and integration of complex financial structures that is typical of The Gottlieb Organization and its companies. Our ideas, our vetting, our diligence, our willingness to listen and redesign and our long and stable perseverance of our goals is properly reflected in this program, likely to be 9-years in development and diligence before achieving our first implementation.
All of our corporate strategies, much as our high and ultra high net worth programs, are borne out of specific circumstances and built with the understanding the weathering a vast array of circumstances and barriers is simply a part of every solution we develop.
COLI Plan Revision℠
In 1997, CPR was first developed under a consulting practice focused on the financing of executive benefits and compensation. With billions of dollars of non-qualified benefit obligations promised, COLI became a highly attractive means by which a company could defease these obligations. Over the past 20+ years, many companies, large and small, public and private, have implemented and maintained these plans - the economics of which are rooted in the underpinnings of the insurance companies’ core investments into fixed income instruments.
In more recent years, variable life insurance programs have been implemented by companies as a means to offer investments for deferred compensation or other executive benefit programs. Variable Life enables a similar investment mix to mirror 401(k) or other equity and financially based incentive and golden handcuff programs. The unlimited upside in the investment returns are most attractive, but the ability to equally “lose it all” in a product with no floor – knowledge that the entire principal as well as earnings are subject to the fluctuations in the equity markets, provides some tempering of these programs.
Regardless of whether one or more COLI plans are in place or if a company is considering the attributes and detriments of such a benefit plan, The Gottlieb Organization’s CPR offers a consulting service to sort through the myths and facts with an organization with world class expertise in these programs and life insurance as an asset class. It is clear that many companies who purchased a COLI plan now maintain these policies and it has become a dormant asset. One thrust of CPR is to awaken this sleeping asset. As occurs with all of our work, we begin with an assessment and creating an agreement as to the desired outcomes to serve as a benchmark for our work, which is often performance-based at the clients’ request.