Many executives have the desire and the ability to defer a large share of their salary or bonus, but are hampered by the limits imposed on deferrals into a qualified plan such as a 401(k). Your outside directors, while deserving to be adequately compensated for their risk in serving, are often successful business owners or have other financial means and would prefer to defer taxation on their compensation.

A deferral program allows your executives and directors to voluntarily elect to defer current compensation on a tax-favored basis, while having the company provide a reasonable yet competitive rate of return on those deferrals. Even with the recent changes in tax laws surrounding nonqualified deferred compensation plans, a well-designed program can be a very valuable and flexible part of the wealth accumulation desires of your key people.