It is often arduous and costly for hedge fund managers to build robust management teams with desirable talent in order to meet legal, regulatory and investor demands. Once found, retaining talented individuals becomes the next critical concern for managers, which they frequently address by using deferred compensation plans to delay an individual’s receipt of a portion of his or her compensation until a later point in time. See “Greenwich Associates and Johnson Associates Issue Report on Asset Management Compensation Trends in 2012” (Dec. 13, 2012). This two-part series provides an overview of the use of deferred compensation plans in the hedge fund industry, including the different forms these plans can take and certain tax matters to consider. This first article explores the intended goals of these programs and tax consequences associated with pre- and post-tax deferral programs. The second article will examine how commonly these plans are adopted in the hedge fund industry; discuss technical aspects of these plans, such as vesting schedules and forfeiture events; and identify categories of employees who are likely to participate in deferred compensation plans. For analysis of trends in compensation at hedge fund managers, see “How Much Are Hedge Fund Manager General Counsels and Chief Compliance Officers Paid?” (Jul. 24, 2014); and our two-part series on the market for in-house compensation at hedge fund managers: “What Is the Value of Legal and Compliance Staff?” (Mar. 12, 2015); and “Trends in Legal and Compliance Hiring and Staffing” (Mar. 19, 2015).