What is the purpose of the NQP Rabbi Trust established by Surestay Hotel By Best Western?
Surestay_Hotel_By_Best_Western Franchise · 2025 FDDAnswer from 2025 FDD Document
d Deferred Compensation Plan ("NQP") and Restricted Rabbi Trust Investments
The Company has a NQP in which key management employees of the Company, as determined by the Board of Directors, are selected to participate. The NQP is a defined contribution plan, in which participating employees may defer a percentage of their annual salaries and a percentage of any incentive compensation into the NQP. The Company contributes: (i) a non-discretionary contribution of 3% of a participating employee's compensation each pay period, and (ii) an annual discretionary contribution, as determined by the Board of Directors, up to 9% of a participating employee's annual compensation.
The Company utilizes a Trust, whereby the Company makes contributions to this Trust to provide the Company a source of funds to assist in satisfying the NQP liability. It is the intention of the Company that the NQP and the Trust shall constitute an unfunded arrangement for the purpose of providing tax-deferred compensation in accordance with Title I of the Employee Retirement Income Security Act of 1974, as amended. It is also the intention of the Company to fund the Trust and have its assets invested in a manner that matches each participant's deemed investment elections under the NQP, so that the investment gains and losses of the Trust mirror the investment gains and losses credited/debited to participants' accounts. The Trust balance was $17.2 million and $17.0 million as of November 30, 2024 and 2023, respectively. Realized and unrealized gains and losses on these investments were realized gains of $0.7 million and unrealized gains of $0.7 million, for the year ended November 30, 2024, a
Source: Item 23 — Receipts (FDD pages 88–286)
What This Means (2025 FDD)
According to Surestay Hotel By Best Western's 2025 Franchise Disclosure Document, the company has established a Nonqualified Deferred Compensation Plan (NQP) for key management employees, as determined by the Board of Directors. This plan allows participating employees to defer a percentage of their annual salaries and incentive compensation. To support this plan, Surestay Hotel By Best Western utilizes a Trust.
The primary purpose of this Trust is to provide Surestay Hotel By Best Western with a source of funds to assist in satisfying the NQP liability. The company intends for the NQP and the Trust to be an unfunded arrangement for providing tax-deferred compensation, in accordance with the Employee Retirement Income Security Act of 1974.
Furthermore, Surestay Hotel By Best Western aims to fund the Trust and invest its assets in a way that mirrors each participant's investment elections under the NQP. This ensures that the investment gains and losses of the Trust align with the gains and losses credited or debited to the participants' accounts. As of November 30, 2024, the Trust balance was $17.2 million, compared to $17.0 million as of November 30, 2023. In 2024, the Trust experienced realized and unrealized gains of $0.7 million each, which are recognized in the Consolidated Statements of Revenues and Expenses.