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term incentive plan (LTIP) is a company policy that rewards employees for reaching specific goals that lead to increased shareholder value. In a typical LTIP, the employee, usually an executive, must fulfill various conditions or requirements.
An LTIP works by rewarding employees (usually senior employees) with cash or shares of company stock for meeting specific goals. The goals are usually long-term, running for 3-5 years to stimulate ongoing progress rather than a-few-months objectives.
One of our most effective long-term incentives is a comprehensive stock option program. By offering our employees the opportunity to purchase company stock at a discounted rate, we are aligning their interests with the company's success and giving them a tangible stake in the company's future.
Long-term incentives are earned based on the achievement of goals over a longer period of time. The goals may be based on stock price or business performance. It's important to take a holistic approach to compensation ? if it's short- or long-term, cash vs. bonds, the kinds of vehicles you're using, and so forth.
Term Incentive Plan (LTIP) is a compensation program designed to reward employees based on their performance and contribution to an organization's longterm goals.
An LTIP is an incentive bonus plan that makes payments based on the achievement of specific goals. Generally, these payments are paid three to four years after they have been earned and after satisfying the vesting requirement.