7. Deferred Compensation Plans

In the view of many experts, we are likely to see additional regulatory
control placed on deferred compensation plans as we go forward, as
well as the possibility of additional disclosure requirements. Despite
these potential changes, deferred compensation will continue to play
an important role in most executive compensation plans and having
a strong understanding of their functioning is a must.

Whether specifically stated or not, tax effectiveness is a goal of
most executive compensation programs. Deferred compensation plans
play an important role in helping companies meet that goal. Simply
put, deferred compensation plans create an opportunity for executives
to voluntarily defer receipt of taxable income to a later date. Depending
on how the plan is designed these opportunities can be applied to
salary, short or long term incentive payouts, stock options gains
and/or the vesting of restricted stock.

The authors begin their presentation by creating the context for
deferred compensation plans, highlighting their growing prevalence,
and how they compare to other company sponsored saving opportunities.
They then walk us through a number of important ERISA and
IRS issues that must be understood and dealt with for the plan to
function properly, and for deferred income to remain tax deferred.
The authors point out, despite these ERISA and IRS limitations, that
there is significant room for design flexibility. They describe in some
detail four “best practices” that in their view make for a stronger,
more flexible plan design. Lastly, they provide the reader with a very
helpful seven-step process for designing a deferred compensation plan.
—Editors



In stock and shipping next business day. U.S. residents can order the
542 page casebound book, including templates and sample documents on CD,
direct from the Publisher for $99.95. The book can also be ordered through any
retail store by the title Executive Compensation: The Professional's Guide to Current
Issues & Practices or by its ISBN number: 1-893190-25-0.