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LTIP (Business Definition: All You Need To Know)

What does LTIP mean?

How do you define LTIP in simple terms?

What’s essential to know?

Keep reading as I have gathered exactly the information that you need!

Let me explain to you what is the meaning of LIP once and for all!

Are you ready?

Let’s get started!

What Is LTIP

In business, LTIP is an acronym that stands for “Long-Term Incentive Plan”.

In essence, an LTIP, or LTIP plan, refers to a company program or policy where employees are compensated for helping the company achieve various goals and add value to the entire organization.

Quite often, employees who are given LTIPs are corporate executives or high-ranking employees of the organization.

For example, an executive of a company may be given the objective to achieve certain business targets and upon achievement of those targets, the executive is given a bonus or award of some kind.

LTIP Definition

What is the definition of LTIP?

Investopedia provides the following definition of LTIP

A long-term incentive plan (LTIP) is a company policy that rewards employees for reaching specific goals that lead to increased shareholder value.
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LTIP Example

Let’s look at an example of LTIP so we can better understand the concept.

A common form of long-term incentive plan given to employees for reaching their performance targets is stock options.

Options may be awarded to employees given them the right to purchase company stock at a discount when the options are vested.

This is a good incentive for employees as they can become shareholders in a company and at the same time participate in the appreciation in the value of the stock.

If the company stock does not perform well, then the employee would not have any incentive to exercise the options.

However, if the company stock is doing well, then the employees can exercise their options and purchase the shares of the company at a price below its market value.

LTIP Meaning Takeaways 

So there you have it folks!

What does LTIP stand for?

What does LTIP mean?

“LTIP” is an acronym that stands for Lont-Term Incentive Plan.

Long-Term Incentive Plans are programs or plans where companies compensate employees for their performance or for achieving certain performance targets.

Some examples of LTIPs are:

  • Company matching employee contributions to their retirement plans
  • Stock options
  • Restricted stocks 

I hope I was able to explain to you what is the LTIP acronym, the meaning of LTIP, and how it’s defined.

Good luck!

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LTIP Bonus
LTIP Compensation
LTIP Program
LTIP stock
LTIP units
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Performance Stock Units
Phantom Stock
Restricted Stock Awards
Restricted Stock Units
Stock Appreciation Rights
Stock Option Plan
Stock options
Warrants
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