A Long Term Incentive Plan (“LTIP”) is not a specific type of share plan, but can apply to any kind of plan that usually operates by releasing shares to selected higher level executives over a long term period (at least 3 years, and often 5 years or longer).
Download free LTIP Fact Sheet
Long Term Incentive Plans are frequently used in larger or listed companies to benefit selected individuals at director or management level. Long Term Incentive Plans can be structured in a variety of ways but a common approach is to award shares to individuals on a deferred basis, so that individuals only have the right to receive the shares subject to stretching performance targets.
Under a Long Term Incentive Plan, the individual benefits from the whole value of the share – unlike a share option, where he will only benefit from the growth in value of the shares beyond the exercise price. The company can therefore use fewer shares to deliver the same level of reward provided under an option plan – which can assist with dilution issues.
This also avoids the difficulty of “underwater” options – a Long Term Incentive Plan can never be underwater since shares can never be worth less than nothing.
Particular advantages of the Long Term Incentive Plan are that it:
For more detailed information on the benefits of Long Term Incentive Plans, please download our fact sheet, or call 020 8949 5522 to speak with one of the team.
At RM2, we believe in taking a consultative approach to building share plans and finding out precisely what our clients are looking to achieve. This approach helps us to deliver a professional and effective service, helping clients meet their goals and plan for the future. Our highly experienced team are well positioned to guide your company through every stage of the share scheme process, including:
The design will flow from your objectives, so the more precise you are the better. What is your business plan, and what you need from your employees to execute this plan successfully? Do you want to focus people on an exit? Do you want to reward all employees as a team? Do you have just one key recruit in mind? We will ask you lots of questions to tease out your objectives.
Once the design and modelling are complete, we will work through your company structure and identify what changes need to be approved by shareholders. We will then prepare resolutions to be passed and work with you to obtain approval from shareholders.
Once an employee share scheme is setup, it is vital that it is administered effectively to ensure that:
Group General Manager, Technopolis Group Ltd
From our initial meeting through to the final deliverables, the RM2 team were impressive. I liked the straightforward advice and the quality and efficiency of service gave me confidence in the solutions that were proposed. I would gladly turn to RM2 for advice in the future.
We have successfully designed, implemented and administered over 1,150 share plans across a range of sectors, so you can rest assured your plan will be in the best possible hands.
If you would like to find out more about how a Company Share Option Plan can help your business, why not call a member of our team directly on 020 8949 5522, request a callback using the button located at the top of the page, download our fact sheet or send an email to email@example.com.
Get your copy of our authoritative guide on employee share plans
See the UK's 50 largest employee-owned companies
Updates on employee ownership & share scheme news
Download a fact sheet about any employee share scheme