LTIP—basic principles

What is an LTIP?

A long-term incentive plan (LTIP) is a term that is commonly used among listed companies to describe an executive share plan under which share based awards are made to senior employees with a vesting period of at least three years. For companies with a listing of equity shares in the equity shares (commercial companies) category of the London Stock Exchange, there is also a specific definition of long-term incentive scheme in the Financial Conduct Authority (FCA) handbook.

Various different types of awards can be made under an LTIP and it is common for an LTIP to be operated in conjunction with an employee benefit trust, which is used as a vehicle to deliver shares to employees when their awards vest.

For more information on LTIPs generally, see Practice Note: What is an LTIP?

Structure of an LTIP

An LTIP