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Long-Term Incentive Plan Guide: RSUs, Stock Options & Performance Shares

Long-Term Incentive Plans are one of your most effective means of attracting, retaining, and motivating top talent. Are you using them effectively?
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LTIP Guide: RSUs, Stock Options & Performance Shares

Long-Term Incentive Plans are one of your most effective means of attracting, retaining, and motivating top talent. Are you using them effectively?
Find out more

As companies evolve, so do the ways they reward employees for long-term contributions.

Stock options alone no longer work. Regulatory shifts, market swings, and new employee demands make generic LTIPs risky. Companies risk losing value and top talent.

Maintaining LTIPs can be complex. This guide gives you a starting point for simplifying them on the platform.

Long-term incentive plans have never been more central to how companies reward and retain talent. According to the Global Equity Organisation’s Global Equity Insights Survey, which draws on responses from 177 companies across 20 countries and 11 industries, LTI administration remains resource-intensive. Plan design is also shifting toward performance-based structures that better correspond to business strategy. As Sheila Frierson of Computershare notes in the 2025 findings: “Even the best-designed plans fall short without broad participation; eligibility, communication, and education are central to unlocking their full impact.”

What Is a Long-Term Incentive Plan (LTIP)?

A Long-Term Incentive Plan (LTIP) is a compensation structure that rewards employees, typically senior leaders and key talent, based on performance or service over a period of three to five years. Unlike short-term bonuses tied to annual results, LTIPs align employee behaviour with sustained business growth and investor value.
 
LTIPs are used by listed and private companies alike to attract, retain, and motivate employees whose decisions have a long-term impact on the business.

The Four Main Types of LTIPs

Stock Options

Stock options give employees the right to purchase company shares at a fixed price (the exercise price) after a vesting period. They are most valuable when the share price rises above the exercise price. Stock options are common in listed companies and high-growth private businesses.

Restricted Stock Units (RSUs)

RSUs are a promise to deliver shares (or their cash equivalent) upon vesting, typically time-based, performance-based, or both. Unlike options, RSUs retain value even if the share price falls, making them broadly appealing across employee demographics.

Performance Shares

Performance shares vest only when specific financial or operational targets are achieved (such as earnings-per-share growth, total shareholder return, or revenue thresholds). They create a direct link between executive pay and company outcomes.

Phantom Stock

Phantom stock (also called shadow equity or phantom shares) provides cash payments equivalent to the value of a notional number of shares.

Because companies do not issue actual shares, this structure suits private companies that want to offer equity-like rewards without diluting ownership.

Why Companies Are Moving Beyond Stock Options

A single-instrument LTIP approach is increasingly difficult to sustain. Regulatory changes, accounting requirements under IFRS 2 and ASC 718, and evolving employee expectations have prompted many companies to adopt blended LTIP structures that combine two or more instruments.
 
A diversified LTIP yields several advantages. It appeals to a wider range of employees, since not all employees value options equally. It additionally offers a more equilibrated risk profile and can be structured to better harmonize with specific business objectives.

LTIP Administration: What HR and Finance Teams Need to Know

Managing an LTIP across multiple instruments, vesting schedules, and participant groups is operationally complex. A platform can help address common challenges, including:
  • IFRS 2 compliance: Share-based payments must be measured at fair value at the grant date, with the charge recognised over the vesting period. Errors in valuation or accounting treatment carry material financial reporting risk.
  • Vesting event management: Tracking performance conditions, service conditions, and lapse events across hundreds or thousands of participants requires audit-grade records.
  • Participant communication: Employees need clear visibility into their unvested awards, projected values, and tax obligations.
  • Multi-jurisdiction complexity: Companies operating across borders face different tax treatment, regulatory requirements, and settlement rules for the same LTIP instruments.
 
ShareForce’s plan administration platform automates the full LTIP lifecycle, from grant recording and vesting calculations to IFRS 2 reporting and participant portal access, helping reduce manual effort and compliance risk.

Discover additional insights

  • Traditional Long-Term Incentive Plans (LTIPs) are evolving. To understand how leading companies are moving past traditional stock options toward more sophisticated programmes that combine RSUs, performance shares, and phantom stock, read our in-depth analysis: How Diversified LTIPs Are Progressing Beyond Stock Options.

Frequently asked questions about equity plan administration

What is equity plan administration?

Equity plan administration is the end-to-end process of managing employee share-plans – covering award issuance, vesting tracking, settlement processing, regulatory compliance, and participant communication. Effective administration ensures share plans operate accurately, on time and in accordance with accounting standard such as IFRS 2 (Share-based Payment) and ASC 718, while providing a transparent experience for participants. 

Every ShareForce client receives a dedicated implementation manager who leads onboarding and then becomes their long-term client manager. Depending on your needs, the engagement includes scheduled check-ins, quarterly reviews, proactive vesting support, and direct access to in-house compliance expertise across IFRS 2, ASC 718, and local jurisdiction tax requirements. Participants have access to a dedicated helpdesk for queries about holdings, vesting dates, and settlements.

A typical ShareForce implementation takes six to eight weeks. The process covers data migration, platform configuration to your plan structures and vesting schedules, and hands-on training for Finance and HR administrators. Data migration is handled entirely by the ShareForce team, eliminating the manual effort and risk of a self-serve setup.

ShareForce supports equity plan administration under IFRS 2 (Share-based Payment), ASC 718 (Compensation — Stock Compensation), and local jurisdiction tax requirements across multiple countries. The platform is used by companies with single-country plans through to complex multi-jurisdiction programmes spanning different regulatory regimes.

The most common challenges in equity plan administration include missed vesting deadlines, settlement calculation errors, difficulty evidencing compliance for audit, and the administrative burden of managing participant data across jurisdictions. Manual spreadsheet-based approaches increase error risk and make audit preparation time-consuming. Purpose-built equity plan administration software addresses these challenges by centralising the full award lifecycle in a single, auditable system.