The deferred management incentive compensation plan is a form of agreement used in most of the corporate organizations. The agreement is between the employer and the employee and outlines various terms and conditions regarding the aspects of deferral practices.
The deferral period generally varies as per the mutual agreement between the employees and the employers. It may be three years, five years or even more than that. Employers opt for different ways of offering the deferred management incentives. The most common ways of offering compensation to the employees are stocks, performance units and deferred cash etc.
The primary tool for compensating the employees in most of the public limited companies is stock. It may be through stock options or restricted stocks. However, stock options are not always available in the private companies and they need a long term management incentive compensation plan to engage the employees at the top management.