Non-Qualified Deferred Compensation (NQDC) Plans remain the most common executive benefit, according to the Prudential and PlanSponsor 2017 Executive Benefit Survey. The survey, which is conducted annually among a wide range of industries, had a higher proportion of large company respondents this year, with 57% of respondents reporting revenues in excess of $1 billion. The results included the following:
- About 85% of all companies offer some form of NQDC (for large companies this goes up to 97%).
- The most popular forms of nonqualified plan are a voluntary defined-contribution plan (66%), defined contribution SERP (27%), 401(k) restoration plan (22%), and defined benefit SERP (21%).
- The average participation rate is 47%, but increases to 60% if a company match is offered.
- About 43% of companies vest the match immediately, while 39% apply the same schedule as the 401(k) and 23% use years of service to vest.
- More than half (58%) of companies informally fund their plan, often using corporate owned life insurance (55%) or taxable securities (35%).
- The vast majority (84%) of companies offer market-based investment crediting options, while 16% offer fixed rates.
- Overall, about 22% of companies offer a separate plan for the Board of Directors, with the most common type of deferrable compensation including meeting fees (76%) and cash retainers (68%). Equity awards were much less common (only 27%).