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A Long Term Incentive Plan (LTIP) is a scheme often offered to senior executives, including board-level directors, under which shares in the employer or its parent company may be awarded at no cost.
At Warner Goodman LLP, our Employment Law Solicitors can provide expert advice on understanding your rights under an LTIP, reviewing scheme rules, and assisting with disputes or negotiations to ensure you receive the benefits you are entitled to.
LTIPs are designed not just as a reward, but as a strategic tool to motivate and retain senior executives while driving long-term company performance. They link executive rewards to the business's long-term success and are an essential part of many executive share schemes.
LTIPs are structured to achieve the following objectives:
Most plans are structured with performance conditions and vesting periods, typically ranging from 3–5 years, during which continued employment and achievement of Key Performance Indicators (KPIs) are required.
Executives may receive different types of awards depending on the company's scheme:
Performance Share Plans (PSPs)
Shares given to senior executives when long-term company goals are met. These plans reward performance and help align executives with shareholder value.
Restricted Share Plans (RSPs)
Shares awarded under certain conditions, often with a “wait and see” period. They encourage executives to stay with the company and meet performance targets.
Deferred Share Bonus Schemes
Part of an executive’s bonus is paid in shares over time. This rewards long-term performance and supports the retention of key staff.
Restricted Stock Units (RSUs)
Shares that cannot be sold immediately. They are granted when executives meet specific performance or service conditions.
Nil Cost Options
Options that allow executives to buy shares for free once certain performance or service conditions are met. They are a common form of long-term incentive.
Phantom Shares
Cash awards tied to the value of the company’s shares or a company sale. They provide performance-based rewards without giving actual shares.
Most LTIP awards vest gradually over several years, encouraging long-term commitment and discouraging early departure. Many plans also include “good leaver” provisions that allow executives to retain some or all of their awards in certain circumstances, such as redundancy, retirement, or ill health.
LTIPs usually include performance and retention conditions to ensure that rewards are linked to genuine business success. Common performance measures include:
In addition, many LTIPs include Malus and Clawback provisions, which allow a company to reduce or recover awards if:
These provisions protect both the business and its shareholders, helping to maintain fairness, accountability, and compliance within executive incentive schemes.
Executives do not gain legal ownership or any financial benefit from their LTIP until the shares vest (once all performance and service conditions have been met). At that point, the shares (or their value) become the executive’s to keep or sell, depending on the scheme rules.
In some cases, especially in private companies, LTIPs may take the form of cash bonuses linked to long-term business performance instead of share awards.
The tax treatment of LTIPs depends on the type of award:
Companies may also be able to claim a corporation tax deduction for LTIP payments, reducing their overall tax liability.
LTIPs are subject to corporate governance rules, regulatory compliance requirements (such as UK Listing Authority rules), and internal company policies. These rules ensure that executive incentive schemes are legally compliant and structured fairly for both the company and participating executives.7
Disputes over Long Term Incentive Plans (LTIPs) can be complex, but our Employment Litigation Team can guide you through every step.
We can help you with:
 | Clarifying eligibility and participation in executive share schemes |
| Understanding performance conditions and award vesting |
| Navigating good leaver vs. bad leaver provisions |
| Addressing clawback or malus disputes |
| Managing tax treatment and regulatory compliance |
We advise both senior executives and companies on all LTIP matters. We can help you understand your rights, review scheme rules, negotiate settlements, and resolve disputes to ensure you receive the benefits you are entitled to under your LTIP.
LTIPs are usually offered to senior executives and board-level directors. While some companies may allow other employees to participate, non-executive directors rarely qualify. Eligibility is defined in the plan rules.
Most LTIPs are pre-determined by the company and subject to strict regulatory rules. However, there may be limited opportunities to discuss specific terms in some private company schemes.
If you leave before vesting, you may lose some or all of your awards unless the plan includes “good leaver” provisions, which can allow partial retention in cases such as redundancy, retirement, or ill health.
Generally, shares or options granted under LTIPs are non-transferable, except in cases of inheritance or specific plan rules. RSUs and Phantom Shares typically cannot be sold or assigned before vesting.
Yes, employment litigation can address disputes over eligibility, vesting, good/bad leaver status, clawback provisions, or misinterpretation of plan rules. Our solicitors can advise on the best approach.
Most LTIPs have a performance and vesting period of 3–5 years, though this can vary depending on company policy and the type of plan.
While both LTIPs and share/stock options can provide executives with equity-based rewards, LTIPs are usually structured to reward long-term performance and retention over several years, often with strict vesting and performance conditions.
Share and stock options, on the other hand, may allow executives to purchase shares at a fixed price and can sometimes be exercised sooner. LTIPs may also include cash-based or Phantom Share awards, which are not typical in standard share option schemes.
Navigating Long Term Incentive Plans, executive share schemes, and related employment matters can be complex, leaving you uncertain about your entitlements, tax implications, or potential risks. We offer a proven track record in handling executive and senior employee incentive schemes, with benefits including:
| Over 170 years of expertise in employment law |
| High success rate in advising on LTIPs, RSUs, and PSPs |
| Clear, fixed-fee pricing for transparency and peace of mind |
| Clients rate us ‘excellent’ on reviewsolicitors.co.uk, based on over 1,000+ verified reviews |
| Fully regulated and authorised by the Solicitors Regulation Authority (SRA) |
With Warner Goodman LLP, you can rely on a team that is experienced, approachable, and dedicated to protecting your rights and ensuring you receive the full benefits of your LTIP awards.
If you are negotiating a new LTIP, reviewing your existing incentive plan, or facing disputes over your awards or deferred compensation, it’s important to get specialist legal advice promptly. Our experienced solicitors can guide you through every stage — from reviewing LTIP rules and assessing performance conditions to understanding vesting, realising your awards, and resolving disputes — ensuring your entitlements are protected and your financial interests are secured.
We assist executives across Hampshire and beyond, with offices conveniently located in Southampton, Portsmouth, Fareham, Chandler's Ford, and Waterlooville. You can choose to meet with us in person or arrange a remote consultation at your convenience.
Call: 023 8063 9311
Email: employment@warnergoodman.co.uk
Alternatively, complete our online enquiry form to request a confidential callback.
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