A long-term incentive plan or LTIP is a type of
executive compensation that typically comes in the form of performance shares or matching shares of the company. In the
United States
The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...
, these plans were used heavily since Internal Revenue Code Section 162(m) passed, which permitted deductions for certain performance-based compensation without limitation. Upcoming changes in the
Securities and Exchange Commission
The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against market ...
's executive compensation policies, however, may change this practice. LTIPs are also used in the
United Kingdom
The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the continental mainland. It comprises England, Scotland, Wales and ...
. In
Switzerland
). Swiss law does not designate a ''capital'' as such, but the federal parliament and government are installed in Bern, while other federal institutions, such as the federal courts, are in other cities (Bellinzona, Lausanne, Luzern, Neuchâtel ...
, LTIPs have seen a strong increase in use since the passing of the
Swiss executive pay referendum, 2013. According to a recent report,
[
] two thirds of companies rely on a single performance condition in their long-term incentive plan and half of the performance-based long-term incentive plans include a relative performance conditions such as
Relative returns.
See also
*
Executive compensation
*
Say on pay
Say on pay is a term used for a role in corporate law whereby a firm's shareholders have the right to vote on the remuneration of executives.
Often described in corporate governance or management theory as an agency problem, a corporation's mana ...
References
Executive compensation
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