Long term incentive plans (LTIPs)

Systems awarding grants of cash or free shares (usually the latter) to executives, subject to performance conditions. They are an alternative to stock options plans. While LTIPs are designed to increase performance-pay sensitivity, however, they also give executives opportunities to manipulate the terms of LTIPs in their own favour, for example by selecting specific comparator groups, at the expense of shareholders and stakeholders in general. If LTIPs are related to the gain in share price plus dividends pay outs are not well linked top performance.Cash plans do not require a shareholder vote, are frequently more tax efficient than share-based plans.