If you’re a high-level executive at Warner Music Group, the Deferred Compensation Plan gives you a tool to manage income, taxes, and long-term planning. Here’s what you need to know.
Who Can Participate?
- Only select management and highly compensated employees are invited.
- You must be designated by the plan committee.
- There may be a base salary threshold for participation.
What Can You Defer?
- You can defer up to 100% of your annual bonus (not base salary).
- Elections must be made before the start of each plan year typically during open enrollment.
- New hires can elect within 30 days of starting.
How Does the Money Grow?
- Your deferrals are not actually invested but are credited based on hypothetical investment funds you choose.
- The company tracks gains and losses using a “Crediting Rate” tied to those funds.
- You’ll receive quarterly electronic statements.
This means your balance is a company liability, not a separate account.
When Do You Get Paid?
Distribution options depend on your status:
| Event | Distribution format |
|---|---|
| Retirement | Lump sum or annual installments (up to 15 years) |
| Termination (non-retiree) | Lump sum only |
| Scheduled payout | After 2+ years, lump sum or up to 5 annual payments |
| Death or disability | Lump sum |
| Financial hardship | Lump sum only, committee-approved |
Tax and Legal Notes
Participants are unsecured creditors if the company defaults.
- All benefits are subject to IRS Code Section 409A.
- Payments are taxed when received, not when deferred.
- This is an unfunded plan, meaning the money is not held in a separate account—it’s a company liability.
Key Risks and Considerations
- Credit risk: Since funds aren’t segregated, you rely on WMG’s financial health.
- Liquidity: Money is locked up until the elected distribution date, except for hardship withdrawals.
- Investment risk: Even though investments are not real, the value can fluctuate with the market.
Why It Matters
If you’re deferring $100K+ in bonuses each year, this plan can:
- Help reduce your taxable income today.
- Create flexibility around retirement income timing.
- Serve as a supplemental savings strategy beyond your 401(k).
But it’s not without downsides—lack of access and potential risk if the company faces financial trouble.
Case Study:
Molly, a Music Executive Navigating Deferred Comp
Molly is 38 and works as a newly promoted director at Warner Music Group. She earns $300K per year, has $250K in investable assets, and a home she owns with her spouse. She just became eligible for stock options and deferred compensation—and now she’s overwhelmed.
She doesn’t have time to dig into tax law or investment simulations. She’s already trying to:
- Pay off her student loans
- Build savings
- Plan for retirement
- Save for her kids’ college
- Handle life in a high-cost city
Without a plan, she risks:
- Deferring income she might need soon
- Triggering a large unexpected tax bill
- Missing the opportunity to invest in more flexible vehicles
We helped Molly build a clear, personalized executive compensation plan that mapped out:
- When and how much to defer
- Which stock options to exercise (and when)
- How to reduce her tax bill by coordinating income, benefits, and deductions
- A long-term savings strategy tied to her career goals
Now she’s no longer second-guessing every HR email. She knows exactly what to do, and she’s finally enjoying the income she worked hard to earn.
Final Thoughts
The Warner Music Group Deferred Compensation Plan can be a smart move—but only if it fits into a broader strategy. For executives with equity, bonuses, and deferred comp, the risk isn’t just doing it wrong—it’s not knowing what questions to ask in the first place.
Next Steps
Not sure how to use your deferred comp or stock options?
I help music executives like you create a system to maximize compensation and reduce stress.
- Download our free executive comp planning checklist.
- Schedule a call to run the numbers before your next deferral window closes.
I’m Spenser Liszt, a CERTIFIED FINANCIAL PLANNER® professional helping high-earning music executives make smart, confident decisions with their money.
I provide straightforward, flat-fee, advice-only financial planning—no sales, commissions, or asset management. I don’t take custody of your investments; I show you how to manage them yourself with a clear, structured plan.
If you’re a music executive and want a thoughtful, structured approach to your finances, let’s talk.
