The FASB codification does not define “deferred compensation” in the master glossary. In practice, the term “deferred compensation arrangement” generally refers to an arrangement between a corporation and selected key officers or employees containing a promise by the employer to pay certain amounts at designated future dates, which may include a period after employment. These arrangements may contain certain stipulated requirements of service. The accounting for deferred compensation arrangements depends on the specific features of the arrangement, such as vesting or the accumulation of the benefit, service and performance conditions, as well as others.

The primary sources of existing authoritative guidance that influences the accounting for deferred compensation arrangements include:

ASC 710 describes compensated absences (vacation and sick time) and sabbatical leave, common sources of deferred compensation. Accounting for compensated absences is discussed in PEB 6.4.

Accounting for deferred compensation contracts associated with a termination event or contractual postemployment benefits provided to former (or inactive) employees is discussed in PEB 8.

Accounting principles for other forms of compensation that have deferred settlement provisions, such as stock compensation plans, are discussed in PwC's Stock-based compensation guide.

Accounting for deferred compensation contracts that are the equivalent of a pension plan or a postretirement health or welfare benefit plan is discussed in PEB 1 through PEB 4. Authoritative accounting literature does not formally define what constitutes a pension plan or other postretirement benefit plan. Such an assessment requires substantial judgment and an evaluation of all relevant facts and circumstances associated with the specific arrangement. Criteria to help determine if contracts qualify as a pension plan are discussed in PEB 1.2.