Because the 401(k) plans—widely provided to corporate employees—are limited in the amount that is tax-deductible to the employer and employee ($17,000 in annual contributions as of 2012, a small sum to top executives), executives are commonly provided with Supplemental Executive Retirement Plans (aka SERPs) (which are defined benefit pension plans) and Deferred Compensation (aka non-Qualifying Deferred Compensation or NQDF). As of 2002, some 70 per cent of firms surveyed provided non-qualifying SERPs to their executives, and 90 per cent offer deferred compensation programs."Executive Benefits: A Survey of Current Trends: 2003 Results". [8. and 37.] (Clark Consulting reports that close to 93 per cent of firms responding to a survey said they had Deferred Compensation plans in 2002) These plans differ from 401(k) plans and old pension plans offered to lower-level employees in that the employing company (almost always) pays the taxes on them, and in the case of deferred compensation, the company often provides executives with returns substantially above the stock and bond markets.Bebchuk and Fried, Pay Without Performance (2004), p.106
