Long term incentive plan (LTIP)

This generally refers to an arrangement under which an employee (usually a senior executive of the company) can be awarded shares in his employer or its parent company at nil cost, subject to a period of continued employment and performance conditions that must be met over a period of more than one year (typically three years). This type of arrangement is also sometimes called a performance share plan (www.practicallaw.com/5-204-1204) (PSP). Some companies use the term LTIP to refer to a different type of arrangement, such as a cash bonus scheme with a performance or vesting period of more than one year. The related term "long term incentive scheme" is defined in the FCA Handbook (www.practicallaw.com/5-107-6609) and used in the Listing Rules (www.practicallaw.com/7-107-6774). This includes arrangements "which may involve the receipt of any asset (including cash or any security)".

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