An arrangement which allows an employee to work, but put off receiving payment for the work until a date in the future. This is usually done for tax concessions, (such as moving a bonus payment to the following tax year). 

The benefit of this arrangement depends on the employee’s tax situation; some employees select a deferred compensation due to its potential tax benefits, in most situations, income tax is delayed until the compensation is fully paid out mainly when the employee retires. The disadvantage or risk of this however, is if the organisation goes bankrupt, the employee will loose everything they have invested in the plan.