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 (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 and used in the Listing Rules. This includes arrangements "which may involve the receipt of any asset (including cash or any security)".

For more information, see Practice note, Long term incentive plans (LTIPs).