Long-Term Incentive Plan - LTIP
Definition of 'Long-Term Incentive Plan - LTIP'A reward system designed to improve employees' long-term performance by providing rewards that may not be tied to the company's share price. In a typical LTIP, the employee (usually an executive) must fulfill various conditions and/or requirements that prove that he or she has contributed to increasing shareholder value. The incentives for doing this are usually conditional company shares, which are distributed in two parts. The first part represents an immediate distribution of half of the shares, while the remaining half of the shares will only be presented to the executive if he or she stays with the company for a predefined number of years. |
|
Investopedia explains 'Long-Term Incentive Plan - LTIP'Some businesses have replaced pure options-based incentives in favor of LTIPs. One criticism about how some firms have been using LTIPs is that executives still receive the second half of the reward even if their performance has not been exceptional in the subsequent years. This is because in order to receive the second portion of the shares, the executive must only succeed in not being terminated in the designated time span.In some forms of LTIP, recipients receive special capped options in addition to stock. |
Related Definitions
Articles Of Interest
-
The Dangers Of Options Backdating
This form of executive compensation can pose serious risks for investors. -
A New Approach To Equity Compensation
The new financial accounting standard known as FAS 123R could take a bite out of your portfolio. Find out why here. -
Should Employees Be Compensated With Stock Options?
Learn the good, the bad and the ugly sides of this type of payout. -
Evaluating Executive Compensation
Find out how to determine whether a CEO is being overpaid. -
Playoff Perks For Pro Athletes
If personal pride, a stellar resume and increased job security aren't enough incentive for some pro athletes, each league has reserved a bit of lunch money to up the ante and help tide athletes ... -
5 ETFs Flaws You Shouldn't Overlook
Despite their popularity, exchange traded funds have some drawbacks that investors should know about. -
5 Common Misconceptions About ETFs
The rise in these funds' popularity has contributed to misinformation about what they are and how they work. Learn more here. -
Top-Paying Contract Positions
A number of contract positions pay more than their salaried counterparts. -
Top Jobs For Tips
Bartenders and gaming dealers are two professions that earn most of their incomes from gratuities. -
Introduction To Employee Stock Purchase Plans
ESPPs offer a very straightforward method of allowing employees to participate in the overall profitability of their employers.
Free Annual Reports