Deferred compensation refers to a portion of an employee's income that is set aside or delayed for payment at a later date, typically after retirement or upon meeting certain conditions specified in an agreement or plan. It is a form of non-immediate compensation that allows employees to defer receiving a portion of their income until a future specified time.

Example
An employer offers a deferred compensation plan to its employees, allowing them to defer a portion of their salary into a retirement savings account. The employees choose to defer 10% of their salary into the plan, which accumulates and grows over time through investment earnings. When the employees retire, they can start receiving distributions from the deferred compensation account, providing them with additional income during their retirement years.