Supplemental Executive Retirement Plan (SERP)

A supplemental executive retirement plan is a deferred compensation agreement between a company and their key executive(s) whereby the company agrees to provide supplemental retirement income to the executive and their family if certain pre-agreed eligibility and vesting conditions are met by the executive. The plan is funded by the company out of investment funds, cash flows, or cash value life insurance. Any deferred benefits are not currently taxable to the executive, and when paid, the benefits become taxable to the executive as income and tax deductible to the company.