Long Term Incentives
Overview
The structure of long-term incentives plays a significant role in executive compensation strategy. While it is important to consider industry practices in the decision-making process, the primary question that needs to be answered is why an organisation would want to introduce a long-term incentive (LTI) plan to begin with. This involves closely identifying the organisation’s primary and secondary objectives so that a one-size-fits-all approach can be avoided. We assist organisations in designing comprehensive LTI programmes that align with their broader compensation and business strategies.
Support We Offer
- Defining plan objectives
- Nature of LTI Instruments suitable for the organisation
- Stock Based Instruments: Stock Options, Restricted Stock Units (RSUs), Performance Shares (PSUs), and Share Settled Stock Appreciation Rights (Stock Settled SARs)
- Valuation Based Cash Instruments: Performance Units, Phantom Stock/Cash Settled SARs; Value Share LTIPs
- Non-Valuation Based Cash Instruments: Long Term Cash LTIPs
- Vesting period and schedule
- Establishing performance metrics for grant and/or vesting
- Definition of weightages in case of multiple performance metrics
- Performance and vesting relationship
- Exercise period
- Employment termination provisions (good leaver/bad leaver provisions)
- Change in Control provisions
- Other Corporate Action provisions
- Other design elements
- Scheme documentation
- Shareholder communication
- Mergers and acquisitions
- Corporate actions (e.g. spin-offs)
- Addressing underwater stock-based grants
