When developing a long-term strategy for rewarding managers, it is necessary to focus on the following requirements. Compliance with them will help avoid common mistakes:
Motivation method: salary + bonus + LTI.
LTI form: cash payment/phantom shares/stock options/zero cost options/ownership interest in a business.
Conditions for issuing LTI remuneration: unconditional (for long-term work) / conditional.
Types of conditions: IPO placement / acquisition of a company / increase in company value / revenue growth / increase in EBITDA;
Vesting period from new zealand email list the date of receipt: not less than 3 and not more than 5 years; every three months.
Payment frequency: one-time / in parts.
Payout structure: 1 to 5; 1 to 10; 1 to 15.
The company's share of capital in LTI: 2 / 4 / 6%.
LTI Building Checklist
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Frequently Asked Questions about LTI
We answer the most frequently asked questions about the Long Term Incentive (LTI) program.
Which company employees are typically issued LTI?
Usually, the LTI system is applied to top managers, the most valuable specialists of the enterprise. Firstly, this is explained by the fact that it is impossible to include all employees in the number of owners and pay each one a significant remuneration, this would seriously affect the stability and finances of the company. Secondly, the largest bonuses should be received by those who directly influence key processes and decisions, that is, the development and well-being of the company.
Is the LTI system used in the Russian Federation?
In Russia, LTI is used very rarely. The main reason is the managers themselves, who are not used to planning development for the long term. This is also facilitated by the changing political and economic situation. Nevertheless, the ability to set tasks on the long-term planning horizon should gradually become the rule, not the exception, then the right ground will be formed for the widespread use of the LTI system.
How long will it take to implement the LTI program?
The required time is determined by the scale of the enterprise and the complexity of the business processes taking place in it. Usually the duration varies from several weeks to months.
After considering the content and purpose of the LTI system, there is no doubt that it is one of the most effective tools for stimulating key employees of the company, who begin to strive to achieve high results and prosperity of the company. An important place in the decoding of the abbreviation LTI is occupied by the long-term nature of the program and the delayed nature of the benefit.