A long-term incentive (LTI) is a type of compensation that rewards employees for achieving specific performance goals over a longer period of time, usually more than one year. LTIs are designed to align the interests of employees and employers, and to encourage workers to stay with the company and perform well. They can take various forms, such as stock options, restricted stock, cash bonuses, or other types of variable pay.
Long-term incentives typically have a vesting period, which means that the employees have to wait for a certain amount of time before they can receive the rewards. It is common for LTIs to be offered to executives to motivate them to put a strategy in place with a long term success strategy as opposed to ‘quick wins’. LTIs can benefit both employees and employers by providing competitive rewards, motivating workers to focus on long-term growth, and enhancing retention and loyalty.
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