Pay · HR glossary

Deferred Compensation

Deferred compensation is pay or a reward scheduled to be received at a later date rather than when it is earned or awarded. Arrangements can depend on service, performance or other conditions.

Example

An executive's approved incentive is partly paid now and partly deferred for a specified period under the employer's plan.

What to keep in mind

Check whether the deferred amount is vested, funded or subject to forfeiture and what happens if employment ends. Tax and regulatory treatment varies, and deferred value may not be equivalent to current cash.

Further reading

← Browse all HR terms