LTI (Long-Term Incentive)
What is LTI? Long-Term Incentive Plans Explained
A Long-Term Incentive (LTI) is compensation designed to reward sustained performance and retain employees over 3 to 5 years. The most common LTIs are stock options (ESOPs), RSUs, performance shares, and deferred cash bonuses.
The defining feature is the vesting schedule. You don't receive the full value immediately, creating strong retention incentive. LTIs align employees with the company's multi-year trajectory and build ownership thinking.
LTIs are most common for senior leaders and high-potential talent, but many tech companies extend equity to all employees. The challenge with LTIs in private companies is liquidity: equity is only valuable if there's eventually a way to convert it to cash.