In this episode Justin and Nathan discuss the key benefits available to Shell employees and how they fit into a long-term financial strategy. They break down how the Shell Provident Fund works, explain the 80-Point Pension Plan, and highlight the unique features of Shell’s non-elective contributions. The conversation also explores what these benefits mean for oil and gas professionals considering a move away from a super major into a more entrepreneurial path, and the financial factors that should be considered before making that transition.

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management.com welcome back to another episode of FPR O&G Financial Planning for Oil and Gas Professionals.

This week on the podcast we are going to discuss a benefit overview for Shell and I think this is going to be a great episode for a few reasons.

Obviously, if you're at Shell, we hope that this is a really helpful resource.

But if you're not at Shell, I think this still has a lot of relevance to you.

If you are at another publicly traded oil and gas company, certainly another large super major, it's always interesting to think about your benefit structure and compare it to another company's benefit.

But even if you are really taking more of a PE route within oil and gas, maybe you own your own company or you're kind of thinking about different career options and maybe you're considering jumping to a smaller venture that has higher upside.

I think there is enormous benefit to think through this idea of.

If I spent my entire career at a super major with their benefit structure, I'm going to end up with X amount of dollars at age 60.

And idea should inform what your savings rate is, what your goals are in terms of if you're going to jump on a smaller venture.

Just how great does the reward need to be to warrant the risk of leaving the more secure wealth path?

Joining me on the podcast today is partner in our firm, Nathan Steel.

Nathan, welcome back to the podcast.

It's been a while.

Thank you Justin.

It is long overdue, but glad to be here.

You know, actually how about you just give your list, give our listeners a little bit of a rundown.

Where are you coming from or which office are you in?

Yeah, so for those that aren't familiar with me, I am located in Houston, Texas.

We are actually coming from the Memorial office, so just to the west of the 610 loop.

It's a great new office.

We're excited to be here.

We've got Josh in the other room over there and it's been good to have a kind of a home base here in Houston and I know we have our space, our satellite space up in the Woodlands, but oftentimes people don't like to trav between those two locations.

So glad to have space in both, both places to serve Clients.

That's right.

And so we maybe have mentioned this on an episode or two, but we currently we now have three offices.

So we are in Houston Memorial, we are in the Woodlands and then Fort Worth here.

And Nathan, I'm actually trying to think it'd be a fun kind of status update, progress check.

What's our status in terms of how many states do we have clients in now, as talked about, you know, a ton of people will retire from oil and gas in Houston and they might retire elsewhere.

We've seen that a ton.

And so it would be a fun activity to get a pulse on exactly how many states do we currently have clients in?

Yeah, we need one of those maps on the, on the wall with pins in each of the states.

That would be a fun exercise.

I love that.

So this podcast episode, we are excited to dive into Shell benefits and just like I mentioned, also talk about how does this compare to other benefit structures at other oil and gas companies?

And then if you're taking a more of a, whether it's private equity or entrepreneurial path in your own career, how much do you need to make in order to warrant foregoing the more traditional super major career path?

Now, before doing that, Nathan, we have kind of a fun competition in the office here at Brownlee Wealth Management.

So we have a small golf competition.

So we're doing monthly head to head matches for all of the rest of this year.

Now we're one month in.

Nathan, how did the first month go for you?

It went about as well as it did for you because we were on the losing end of both our matches.

So we've got to bounce back.

But I see some wins in our future.

That's right.

Optimism is high, hope is high, and I think Nathan and I have an incredible opportunity to bounce back.

But we did, we did both lose our opening matches to Jared and Josh.

And so we need to, we need to, you know, make a strong comeback.

Well, let's dive in to Shell benefits.

Now what I want to do in this episode is I want to give an overview of the Shell provident fund, the 80 point pension plan, the APF pension plan, the BRP, the benefit restoration plan, and then also talk a little bit about equity compensation Jessup and other might hit a little bit on healthcare and health insurance and stuff like that.

But Nathan, any high level thoughts before we dive into the Shell Provident Fund, which is their 401k plan?

No, I think this is a great framework.

I love going through these benefit structures.

From the energy industry.

A lot of companies will have similar knobs and levers in order to incentivize employees.

But everybody has a little bit of nuance.

And so it's good to unpack it a little bit and get into the details just to make sure people are taking advantage of everything available to them and understand what's out there, what the lay of the land really is in the space.

So I'm excited for this conversation.

I love that really quick question.

You came from Koch Industries, so you were kind of a natural gas trader and scheduler.

So now that you've got your CFP and you've certainly studied and got into the weeds of several different companies benefit plans and you've done so for years now, how has that kind of changed your perspective on your benefit structure back at Koch?

When you're coming from any large corporation or large company, you might not always understand the lay of the land.

I look back now at my time at Coke and understand there were some pretty good benefits available through Coke.

And so I think looking at the energy space specifically, some of these contribution rates are pretty incredible.

And I think it really just speaks to some of the work we do and why we serve our specific clientele is, you know, there's a ton of wealth accumulated in these, in these plans.

And I think it's a great opportunity for folks to really capitalize on the generosity of these companies.

And there's just a ton of different benefits.

Looking back through my benefits at Coke, there's a lot of elements of those plans that maybe I didn't pay enough attention to when I was there.

And as I've been able to review more of the plans from different companies, start to get a better understanding of the all the different elements and how to take advantage of them.

And so definitely makes me appreciate the benefit structure I had and just allows me to help others understand theirs a little bit better.

Absolutely.

With that, let's dive into the Shell Provident Fund.

Now if you are not an employee of Shell, this is the name of their 401k plan.

So we are going to start with, as the IRS would define it, a defined contribution plan.

We will then go into pensions which as the IRS defines those, those are defined benefit plans.

So from a qualified defined contribution plan, this is where you, the employee are in charge.

You have more agency over how it's invested and some of the decisions involved.

So Nathan, with the Shell provident fund, the 401, where should we start with that benefit?

Yeah, I think a great place to start is the company contribution, it's a big component of any really any 401k plan.

And so Shell's is a bit unique in that they don't actually have a matching component.

One of the common expectations in a lot of 401k plans is you put in a certain contribution, the company then matches up to a certain percentage.

Not the case with the Shell Proven it fund.

And so the way they've structured it, it's a little bit different.

You get what they call a non elective contribution.

So regardless of whether you participate and contribute or not, Shell will contribute a defined percentage of your salary or your compensation throughout the year that is graduated based on years of service.

And so if you're employed less than six years you will receive a 2.5% contribution.

Six to nine years you'll receive a 5% contribution.

And then nine plus years of service you receive a really healthy 10% contribution.

And so a little bit unique in that way.

I know we were talking a little bit ahead of this conversation that it's unique and maybe a little less favorable than some of the different companies in the space that it takes such a long time for you to accumulate a large contribution from the company.

And so that's a really good place to start.

Any additional thoughts on how they've structured it or any thoughts in general on that?

Yes, I have a lot of experience with the Shell Provident fund.

Fidelity is the custodian of that.

So you know, if I go back seven, eight years to when I was a lead advisor at Fidelity, I saw this plan all the time.

A couple quick things I want to make note of.

The investment selections are incredible.

They are fantastic.

So just a ton of excellent low cost funds.

And then Certainly anytime a 401k plan has brokerage link, I think it's important to highlight that if you were listening to this, brokerage link is a element of a 401k plan at Fidelity.

So if Fidelity is your custodian, Brokerage link is a feature where you are able to allocate dollars in your 401k and trade them to basically any publicly traded security on the Fidelity brokerage platform.

Now if you are kind of listening to this and you don't have experience with brokerage link, that might sound a little bit crazy.

And it is different.

When you are in a 401k you typically have a list of 20, 30 funds and you pick how, what percentage, what allocation across those 20 or 30 funds do you want your 401k to be invested in?

Now brokerage linked is effectively giving you the opportunity to not be confined to A list of 20 different investments options and instead you can go basically buy anything on Fidelity's brokerage platform.

Nathan, all in all, I think it's a pro, but I also think you could make a case that it's potentially a negative.

What are your thoughts on brokerage link?

I think it's a good point.

We always want to take a look at the allocation options, the investment options with any type of 401 plan and whether or not you have them available within the core plan.

Having brokerage link allows you to have access to the full universe of funds out there.

And so with that access comes some responsibility.

You don't want to overdo it so much to where you may be tinkering and getting really strategic and tactical.

We want to make sure that we're keeping things simple where possible.

Broad diversification, we love that.

And so I think the brokerage link is a great feature.

I think one thing I would call out specific to Shell is Shell allows you to invest 100% of your provident fund into brokerage link.

And that is not always the case.

Sometimes other companies will require you to have 50% within the core plan.

And then 50% can go to brokerage link, but you can go 100% all into brokerage link if you wish.

But with that, we would just maybe preach a little bit of caution.

Let's make sure that we're still being mindful of diversification and maybe not.

Not going overboard with.

With all the flexibility you might have.

Yep.

One other thing I'd mention there.

It is completely okay as an investor if you want to pursue some different stock purchases that are outside of your meat and potatoes core plan.

If your meat and potatoes core asset allocation plan is robust enough to achieve financial independence.

And so said another way, let's pretend that someone needs 200,000 a year to be financially independent.

Well, they probably need a portfolio around 5 and really after taxes, potentially 6 million in order to solve that if you, if you want to spend 200,000 a year.

So let's, let's call it 6 million or so, give or take, you know, a chunk depending on the tax registration and structure there.

So if someone has $8 million and they only need 6 million in order to hit their financial independence, well, theoretically they've got some wiggle room there.

Right.

And so, you know, Nathan, if there's a person out there that loves investing in individual stocks or certain strategies of any kind, I think that's okay to do what you don't want to do is you're on a tight financial plan and now you're allocating your 401k to, you know, a certain strategy or four different stocks.

And guess what?

A lot of strategies and a lot of individual stocks don't end up outperforming.

And so that's the caution there.

But all in all, Shell Provident Fund is a wonderful benefit.

You have a massive match now, one call out, it does not grow to its full maturity in the company contribution.

Excuse me, the company contribution is not full until.

Nathan, year nine, nine year schedule there.

So I don't love that.

That's okay.

If you join shell as a 22 year old and you're probably not making a whole lot of money until you're closer to 30 anyway.

But the idea there is you're at Shell for your entire career and you are capitalizing on a really large company contribution to the 401.

Once you start making a lot of money, it is less lucrative if you are 38 and you're thinking about jumping the shell today and then you've got to wait for nine years to get this full match.

Well, that's, that's going to change the numbers a little bit.

And I do think there's an element where a lot of super major benefits are drafted.

There are, they're, they're designed with the idea that we will hire someone and they will never work at another place.

We will hire someone in their early 20s and they will, they will stick here for their entire career.

And so I think the duration of just how long it takes to get the full company contribution, that is a negative if you're jumping later in your career.

But it's okay if it's early.

Nathan, anything else before we jump onto the pension plans?

I think we've covered a lot of the key features.

And one last thing I might call out is they do have a lot of different flexibility in how you can contribute to the plan.

Obviously the standard pre tax Roth, they also provide the after tax contributions and then in plan Roth conversions.

And so it just maximizes your ability to contribute to the plan in a variety of ways, even allowing access to what they sometimes call the mega backdoor Roth strategy.

So a lot of flexibility and opportunity to contribute to the plan.

Love that.

Well, let's dive into the Shell 80 point pension plan.

Nathan, do you want to give us a quick overview of the 80 point pension?

Sure.

So like we mentioned, there are two pensions available at Shell.

Various different eligibility requirements to access them, but specifically on the 80 point pension that's going to be determined, your eligibility based on your years of service and your age, the combination of your age and the years of service.

And so if the combination of those two reach 80, you are oftentimes eligible for the 80 point pension.

One of the really important pieces of this pension is you only have the ability to take this benefit as an annuity.

And so a lot of times with pension assets you have some various different distribution methods.

And so for the 80 point pension, you don't necessarily have the ability to get a lump sum distribution.

It has to be taken as an annuity.

And so in terms of the benefit, the annual benefit, you're basically going to take your average final compensation, which is basically the three years, the highest three years and the most recent ten year working period at Shell, and then you multiply it by your years of service and then 1.6% multiplier and that will provide your annual benefit.

And so it's really a great benefit.

But some things to be mindful of in that process are, you know, when are you taking your benefit?

If you take your benefit prior to age 60, you aren't going to necessarily receive your full benefit, your full pension benefit that you would otherwise receive.

But also delaying some of the benefits can also open up windows for tax strategies as well.

And so plenty of things to consider regarding the 80 point pension that we would recommend just working, working with a knowledgeable advisor to help think through that asset.

Nathan, I have a really mixed review of the 80 point pension plan.

And this is all going to center around the structure of a employee benefit being basically just about any oil and gas company.

There are a few where this is going away, but a lot of the oil and gas companies, if you have been around for more than 15, 20 years, you probably have a pension as a benefit.

Now what's unique is most people in oil and gas who have a pension, it has a lump sum option, right?

And so you always have the agency to retire and take your pension as a lump sum, roll it over to an IRA and you're, you're able to deal with that total dollar value, which is important because if something happens to you early in retirement, well then your family gets that money.

Obviously when you have an income annuity, that is a totally different structure.

So Nathan, the first thing that comes to mind for me is boy, you better with a massive asset as the 80 point pension plan is a very significant asset.

If this is in your benefit structure, you better retire as early as you can while still maximizing the benefit and hopefully be healthy enough to enjoy it.

Now there is an element of this, and I want to call this out, this is a little bit of a plug in, a bonus of taking a more entrepreneurial path and a little bit of a bonus of maybe you are in a career track within oil and gas where you have the opportunity for a significant payday earlier in life.

Because what that does is, I mean, it's great if you want to work forever.

Let's say someone just loves what they do and they want to be engaged in some type of work for a long time.

Well, that's wonderful.

If you have non retirement assets that can just, you know, you can enjoy your life and spend your money in a way that aligns with, with how you want to live.

But if you have a huge part of your benefit structure and how you're building towards financial independence is all in the form of an annuity, well then there is a dynamic where you need to hit financial independence.

You need to have a high savings rate to be able to leave right at, you know, let's just say 55 to 60, but probably 60 is ideal.

And then you need to be healthy and you need to live for a long time and actually enjoy that benefit because you know, no one knows how long they're going to live.

And it's totally possible that you could have this employee benefit that you're working for for 35, 40 years and then it just doesn't pay out very much and your family doesn't get much from it.

And so there's a dynamic there.

And I think it's possible for some of our listeners to say, well that's a little bit of a point to either, you know, not have the 80 point pension plan and have a pension that I can take as a lump sum, but maybe it's also a plug for there's some viability.

There's some good reasons why you would pursue a path that can produce wealth in non qualified retirement plans that are outside of retirement plans that have a little bit more liquidity and access.

Absolutely.

And I think that a number of our listeners, they actually get excited about a bit of a guaranteed income source.

And I think it's a pretty common, common thought that, you know, having that guaranteed income, it protects me, it keeps me safe.

It's very comforting to know that regardless of a market crash, you have this income coming in.

And it also helps to Replace mentally, psychologically.

Receiving a paycheck while you're working can be a big deal.

And so in being able to recreate that in an annuity or a pension annuity option is, can be a really attractive thing.

But one of the big things that I think you're hitting on is important that there is no cost of living adjustment each year.

And so you have to have this be a piece of your plan.

But we're not only guarding against market crashes, we also have to guard against inflation.

And so building non retirement brokerage assets like you mentioned, also taking into account some of these other assets in your plan, we have to make sure that we're investing your allocation accordingly.

If you have one of these 80 point pensions, this is a big fixed income position.

And so make sure that the remainder of your assets are invested accordingly to help outpace inflation likely investing in some more equities in other areas of your plan.

That's well said.

If I dive into this topic, this is very relevant for annuities in general.

Annuities are not always a bad thing.

Here is the issue with annuities and it really hits on do you have a cost of living adjustment or not?

Most people who purchase an income annuity do not have a cost of living adjustment.

They have to take a much lower payday on year one if they do.

And so I want to give a quick example.

Let's say that a person is 60 years old and they take $1 million of their nest egg and they go buy an income annuity.

And that income annuity might pay them 50, $54,000 a year for the rest of their life.

Now there is an element where that person is thinking, hey, this is incredible.

I get a guaranteed $54,000 per year income stream and it's so much safer than investing in the stock market.

Now there's some truth to that.

But Nathan, compound interest.

We talk a lot about how many psychological studies have shown that the human brain is just not wired to understand compound interest.

Now that is very true in a negative sense when it comes to inflation.

And so that family who just took a million dollars and they now traded it for a 54,000 a year annuity income stream.

What they probably don't understand is that is going to be worth wildly less in 15 or 20 years.

That purchasing power is going to be just eroded in many ways.

And so you hit on something very important.

A fixed income stream in the form of an 80 point pension, Planet Shell or an income annuity.

This can be wonderful if it applies to A specific expense in life that may not be as subject to inflation as something else.

Maybe you have 20 years left on a home mortgage.

That's a great example.

And it's a fixed rate mortgage that can be beautiful.

But if you are taking 90% of your available wealth and putting it in income annuities, you know, don't do that.

And that is going to put you in a position where you don't have other investments that can keep up with the rising inflation risk over time.

And so any last points on the 80 point pension plan before we transition to the APF pension plan?

No, I think that's a pretty great summary of it.

Let's keep moving.

Wonderful.

Now, APF pension plan, a little bit more traditional, lot more.

You know, if you're at any oil and gas companies, this pension plan is likely going to look a lot closer to your pension plan and that you have the opportunity to elect a lump sum payment and roll that over as a trustee to trustee, direct rollover from the pension to an ira.

Now Nathan, what else should we cover on the apf?

Yeah, just a quick summary of that calculation.

A little bit different than the 80 point pension plan.

So instead of, you know, the multipliers and the different years of service, you are simply going to have an equation where you're again taking your average final compensation, but you are along the way, while you are participating in this APF accumulated percentage formula pension, you are going to, like the name would suggest you are going to accumulate percentages each year.

So you will accumulate different percentages based on your years of service and your years of participation in the APF program called APF service years.

And so we are going to take the accumulated annual percentages times your average final compensation.

And so that will give you your lump sum value that Justin mentioned.

You have a few different ways.

You can also take this as an annuity, but you also have the ability to do the lump sum value, which is an attractive, just attractive flexibility.

That's right.

We've talked about this on the podcast before.

I do think a lot of oil and gas retirees have, have transitioned to, hey, we're not electing an annuity, we are taking the lump sum.

And I think this is true, or I think it's happening for a couple of reasons.

One, it's that dynamic we just talked about with the annuity pension situation where, you know, no one knows how long you're going to live.

And so certainly there is a massively attractive feature of, hey, let's roll it over to an IRA and now it is an asset that whenever something happens to me, it can pass down to my children or any family member.

So I think that is a huge reason.

I do think there's an element where vast majority of financial advisors charge on a percentage of assets.

Therefore they get to charge clients more if their portfolio has more money in it.

And so that right there is a little bit of an incentive for financial advisors to tell everyone they can to roll over to the IRA instead of elect an annuity because now the portfolio is bigger and they can charge more on it.

And so I think that's worth being aware of.

But all in all, I think the APF pension plan, great benefit.

And when you think, and this goes back to what I said at the beginning, Nathan, when you think about having a really large company contribution into the 401, this pension plan, and then we'll get into the BRP benefit restoration and also just different forms of stock compensation, you have the potential, and this is true at just about every super major.

If you want to camp out and spend 35, 40 years and spend your entire career at a super major, it is very, very possible for you to hit 5, 6, 7 million in assets without ever making more than 200, 250,000 a year.

And if you are able to make, you know, 3, 400, 500 or more, or maybe you're a family and you have two spouses that both work, it is absolutely possible to hit 10 million and above.

So we did a podcast, we did an article on this idea that I firmly believe the easiest path to hitting 5 to 10 million in net worth in America is spend 35 years at a super major oil and gas company.

And as long as you stay employed and are able to just collect these benefits, you are going to retire with an incredible amount of money, which also produces an incredible amount of tax opportunity.

Yeah, I think that last statement is somewhere I wanted to go with this specific asset.

Because you have the ability for the lump sum, not only does it allow you to pass on these assets to next generations, it also frees you up to make some more intentional tax decisions.

And so if you were to take the annuity option, you would be kind of filling up some of those lower tax brackets with income that could otherwise be used for potentially a Roth conversion strategy.

And with a number of the clients that we serve that leave super majors like Shell, you have a large amount of pre tax dollars that could benefit from a really intentional Roth conversion strategy.

So having the ability with the APF pension to take a lump sum Just opens up some tax planning ability for clients where it makes sense.

Absolutely.

I want to make a quick call out at the beginning.

I mentioned that there's a lot of people, especially in our generation in oil and gas, who are thinking, hey, I don't want to be at a super major for 40 years and I want to either do something on my own, more entrepreneurial, or I want to join.

Maybe it's a privately held company, maybe it's PE backed.

But long story short, I want to be in a career situation where I'm taking on a little bit more risk and have the potential for higher payouts, bigger risk, bigger reward.

I want you, if you're in that situation, to be thinking, if you're going to pursue that path, the payoff needs to be worth it.

And if I, if you force me to just give you a number right now, I'm going to.

I'm.

This is my number.

You need to be able to accumulate $10 million by the time you're 50.

I really think that's a.

And again, there's tons of nuance there and we could get into the weeds of, well, what about 48 or 56 and, and how much exactly does it need to be?

But I want to communicate very clearly.

If you spend your entire career to super major, you really have a pretty, you know, pretty clear path to hitting 5, 6, 7 million dollars.

Or again, if both spouses work, or if you end up making more than 500,000 a year, you can get to 10 million plus.

So I really think the easiest way is if you're going to forego the super major option, I think you need to have the potential opportunity to where, yes, you could make $10 million by the time you're 50.

Another way to put it, we do have some, and I mean, Nathan, we have some clients in this boat who have left large oil and gas companies and they've started very small kind of solo companies where they might be utilizing just their services or consulting on some aspect.

And it may not be a play where they're trying to build something and have a payday.

Instead, it could be, I want work, life balance and I want to make a tremendous amount of money, but I want to just, you know, have this job for the next 30 years if that's your situation.

I want to also be very clear, your savings rate, the amount that you are putting into investments every year.

Again, if you're foregoing this super major career track, try to put about 100,000 a year into investments and that will ensure that you're able to match or beat the benefit structures that we're going through right now with Shell.

Yeah, great thoughts, Justin.

Not only is there the financial component of if you're going to take the additional risk, you want to have the financial upside in maybe a PE backed venture, but I think you also touched on the fact you want to be able to achieve it by the time you're 50.

There's a lot of upside if you stay in any venture for a long time.

But the idea that you would kind of supercharge the financial upside while also doing it sooner than you otherwise would, I think that's an important consideration if you're going to take another opportunity like that.

And I don't even want to dive into this can of worms, but I do want to quickly mention the number could also be higher than 10 million.

Because Nathan, if you are getting a payday at 47 and you're retiring, well, you are at a massive financial disadvantage compared to a Shell employee who's going to age 60.

And so you're missing out on 13 years in that example of additional compound interest with your portfolio.

And you are, I mean it's not just not being invested, you are spending that money.

And so there is a huge difference.

We talk about this a lot.

It is a financial superpower to, to be able to last from like 47, 52, 55, kind of those early retirement years, be able to have some form of income to 60 or 65 that allows your portfolio one or two more doubles.

And so it is a massive factor.

And because of that factor, if you are in a situation where you're going to take a payday and just full on, stop working.

I can make a very strong argument that, you know, your hurdle rate or your, the number that you need to get needs to be even higher.

Yeah, very good point.

I think that's spot on.

Okay, I want to make a real quick flyover on the brp.

So, you know, pretty normal benefit for any oil and gas company, really any company in general.

This is a non qualified plan.

So IRS, what is the annual limit of compensation?

Is it 360,000 this year?

360.

It's in that ballpark.

So if you make more than that example, let's say you make $700,000 a year.

Well, the IRS does not allow all of that income to go into qualified retirement plans.

Your income is too great.

So once you hit that $360,000 limit, you can no longer put that money in, which therefore means you're missing out on A benefit and you would be hypothetically or really you would be missing out on employee matching or contributions on those benefits.

And so BRP just like any non qualified plan, it's kind of a true up where those dollars are now going into a non qualified plan so that you're not missing out just because you make a lot more than the IRS max.

So I think that's a good call out now, quick review of equity compensation.

Nathan, do you want to talk about the Jessup and other stock compensation?

Shell?

Yeah.

So like Justin mentioned earlier in the, in the episode, we've had the, we have the global employee share purchase plan, we also have the psp, the performance share plan and the long term incentive plan as well.

And so a variety of different ways that Shell employees are compensated with equity.

If we just hang out with the Jessup for a little bit, this is actually a really attractive option for a lot of employees.

There's broad eligibility throughout the company so it's not necessarily isolated to specific individuals.

And really all you're going to do in this situation is you are going to set aside a number or some funds from your paycheck each month from January to November that goes into this plan, at which point you get the opportunity to purchase Shell shares at a 15% discount.

So that's a really attractive opportunity on its face.

But I think one of the really advantageous things that Shell does is they provide a look back provision so the employees get the opportunity to purchase at the lower of the share price between January, January 1st of the previous year and January 1st of the current year.

And so you get the opportunity, whether the price of Shell is going up or down, you still get a really advantageous price in that process.

And so I think that's an incredible structure that allows clients to and take advantage of this program.

I think there's some other considerations when you think of the income tax or capital gains tax associated obviously with any of these equity awards, you want to be very mindful of concentration risk.

And so you already have a significant form of your income in your paycheck tied to Shell.

And now if you were to participate in any of these programs, you would just further amplify the concentration of your wealth tied to one company and so be thinking through what is my ability to diversify, what is my need to diversify and where are the tax implications of doing so.

And so when you think about this Jessup program, specifically that discount that you receive on those shares that is going to be treated as income in the year that it's received and so there's going to be withholding from that award and then any cells after that.

After that you would pay the difference between the market price and the basis.

And so that's going to be capital gains tax.

And so be thinking through what is the most tax effective way for me to diversify this concentration.

It doesn't make sense in every case but largely.

Justin, I'm interested to hear your take.

Largely we like the idea of selling those shares pretty close to vesting to be able to minimize any capital gains on those shares and diversify pretty quickly.

And so it's a great program and I think they've structured it really well for their employees to take advantage of the discount.

Yep, I think that's well said whether it's long term incentives, psp.

But also let's just zoom out right and talk about equity compensation.

It could be rsus or any type phantom stock, whatever equity compensation that we go into at at any company.

You make a really good point.

We love equity compensation because you're able to build wealth in a non retirement, non qualified retirement plan and so those assets can be a little bit more liquid and not, you know, subject to 55, 59 age requirements.

So it's wonderful.

And hey, how much do we talk about with oil and gas retirement structures?

You have to be mindful of building enormous wealth in pre tax retirement plans that will create significant tax obligations for the rest of your life.

And so we love having some non retirement assets that are exposed to capital gains instead of income tax.

But always be mindful of hey, how much concentration risk do I have?

I love asking the question where does my financial security come from if you're employed at Shell?

Well the answer for today is Shell.

Where does my financial security come from 10 years from now, 40 years from now?

Well, if you own 90% of your balance sheet is all in one company, well then the answer to that is that one company.

So being mindful of that I think is very prudent.

I do think also helpful to call out again.

I think this is really helpful framing if you are thinking about not going on the typical super major career path.

Shell like many others has health insurance plans for retirees and so really quick 30 second call out.

A ton of people love this idea of retiring at 55 and standard American retirement age is kind of 65, 67.

And so if you're going to retire at 55 instead of 65, well one of the biggest considerations is you have 10 years of health insurance that you might have to pay for and you might have to pay a lot depending on a lot of different factors.

It is great that Shell has a potential benefit here, just like a ton of super majors do.

It just eases that transition from age 60 to 65 or maybe you retire at 52, 55.

It makes that transition a lot more palatable.

Nathan, are there any other benefits that we should talk about here with Shell?

No, I think we've really run the whole gamut on all the different incentives available, all the different benefits available.

I think the takeaway for me is you'll see a lot of the same elements in different industry companies, just a little bit different nuance.

Two Pensions I think is definitely unique.

The share purchase program I think is structured very well.

No match.

I think there's a variety of things that are just a little bit different that but we want to make sure everybody understands so they can make good decisions based on their situation.

That's right.

I think, like we've mentioned, this is another incredible benefit structure and just an incredible way if you're going to spend 30, 40 years at Shell, you can really build some incredible wealth.

And I always think it's fun to just compare benefit plans and the different financial implications of that.

And then also, like I said, compare it to if you're going more of a founder, entrepreneurial or private company path.

Path.

It's super fascinating to dive into the weeds of how do I make this trade off worth it?

Well, love diving into this and if you have any ideas for future podcasts, please reach out.

We love to explore different topics and until next time, that's it for the Shell Benefit review.

Thanks for listening to this episode of the podcast.

You can subscribe or connect with us@brownleewealthmanagement.com or send ideas for future episodes to podcastrownlee wealthmanagement.com thanks and we'll see you next time.

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