Long-term Incentive Plans
Retaining key employees is a key consideration for almost every business. Long-term incentive plans are usually awarded to senior executives in an organisation and normally take the form of increased shares in the business without cost.
Long-term incentive plans are usually awarded to employees once they have reached or met specific goals or requirements. In the same way other incentives are designed to retain valuable people, these can achieve the same objectives.
Long-term incentives are therefore often offered as a way to promote further staff engagement and alignment with the strategic goals of the business, over a longer period of time. The more “long-term” nature of these incentive plans means that they are most likely to work effectively in respect of the long-term engagement and retention of key employees.
Long-term Incentive Plans
Long-term incentive plans also offer more flexibility than share schemes and can be designed to meet the commercial requirements of a business and its shareholders.
Unlike share schemes, long-term incentive plans offer no tax relief and should be used primarily as an employee retention and engagement tool rather than as a way to give employees some ownership over the business. There is a cost to setting up a long-term incentive plan, but this can be tax deductible.
If you are looking to introduce long-term incentive plans for some of your employees or would like to make changes to existing plans, our Employment Team is very experienced in working with businesses in order to ensure that these schemes are tax efficient and work with clients to identify the best devices to be used to achieve the overall commercial objectives.
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