Long-Term Incentive Plans (LTIP)

Key facts:
The term “LTIP” commonly refers to an arrangement under which one or more senior executives are awarded shares at nil cost on a deferred basis and subject to a period of continued employment and certain corporate performance targets. Unlike a share option, the executive receives the whole value of the shares, not just the growth in value over the exercise price.

PAYE (and often National Insurance Contributions) will be payable upon the issue of the shares. LTIP schemes tend to be favoured by larger, listed companies and the approval of the shareholders of such companies is therefore required before a LTIP scheme can be introduced.

Who can benefit?
LTIPs are usually offered to senior executives only.