Sierra Health Services (SHS), a diversified healthcare provider in Las Vegas, grew from a one physician's private practice in the 1970s to Nevada's largest multi-specialty medical group with multi-billion revenues (NYSE:SIE).

In response to FAS 123R and the loss of stock options, SHS turned to Clark Consulting to bolster the deferred compensation plan and two SERPs put into place earlier. To offset the accrued liability in each plan, and to provide additional benefit security under the plans, SHS established an informally funded Rabbi Trust.

SHS was concerned about the possibility of accelerated departures or disincentives to performance; executives were concerned about diminished value of their compensation packages with the demise of unvested options. SERPs provide an excellent vehicle to deliver long-term and performance-based incentives. SERPs mirror long-term incentives with:

• Performance-based criteria
• Long- or short-term horizon
• Vesting
• Tax deferral