Long Term Incentive Calculator

Stock Option Calculator

Calculate the potential value of your long-term incentives, including stock options and RSUs, with our easy-to-use calculator.

Long Term Incentive Calculator

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Calculation Results:

Select a plan and enter the required details to see the results.

Long term incentive plans (LTIP) are to drive short-term, mid-term and long-term performance to motivate, enhance performance and retain employees.

Three Types of Long-Term Incentive Plans

1. Deferred Restricted Stock Annual Bonus

The plan would encourage employee retention, drive short term performance and mitigate risk.

Company offers eligible employees’ choice to invest up to 30% of annual bonus into company shares, restricted for one year
Company could grant an additional 20% of shares on invested amount, providing the employee with an incentive to wait for award payout OR give the employee a 20% discount on the share purchase price
Giving employees the choice to participate voluntarily will provide a clear picture about how employees view the company
Employees who invest bonus are better aligned with shareholders
Company would guarantee 30% voluntary deferred cash value, but only grant the 20% additional shares if employees remain employed for the one-year deferral period

2. Three Year Performance Restricted Stock

Plan ties performance requirements to restricted stock allocations, driving performance over the three-year vesting period.

How many shares vest depends on achievement against performance conditions, based on company performance targets? Future looking performance targets would be set based on Corporate three-year plans
Awards would be discrete, granted only every three years, to target mid-term performance, prevent “double-dipping”, control share usage and ease administration
Target and maximum award values should vary by position level and be aligned to market rates

Target and Maximum Award Values

3. Five Year Thrift / Savings Plan

An integrated incentive and savings scheme for all company employees to buy shares.

Employees allowed to enroll only once per year into 12-month savings contract. Two invitations per year to allow new plan participants to come in (new recruits).
Price for Share purchase is average of 30 days prior to invitation
Each employee may contribute 5% to 15% of monthly salary by payroll deduction
Employee can suspend contributions at any time before end of Savings Period but must wait for next invitation to re-enter plan
Savings will be applied at end of savings period to acquire Shares
Cumulative company matches as a percentage of contributions per full year in plan. 15% for year 2; 25% for year 3; 35% for year 4; 50% for year 5
Shares purchased from Employee contributions may be withdrawn at any time, but employee will lose right to further company matches
Shares allocated as Employer contributions have ratable vesting, which begins after a two-year period. 25% after year 2; 50% after year 3; 75% after year 4; 100% after year 5
Employee contributes 10% of annual salary each year for five years

Employee Saving Plan Model

Long-term Incentive Plans Objectives

Create Shareholder Value

Encourage share price growth
Fund award through incremental value added
Leverage the company’s investment

Encourage Employee Performance

Encourage profitable multi-year investments
Help executives further understand long-term implications of business decisions and strategic direction of the company

Retention

Support retention of key executives and employees

Ease of Implementation

Board and regulatory approval
Plan adapted to fit within company and culture
Cost and share usage

Align with Market Practice

Align plan to international and local market practice

Summary of Long-Term Incentive Plans

The three plans would help drive short-term, mid-term and long-term performance.

Leavers

Leaver provisions provide a basis for dealing with (good leavers and bad leavers) participants leaving the organization prior to the vesting period.

Good Leavers

Includes employees leaving the organization due to death, disability, retirement, redundancy, or other reasons to be determined by the Board
In case of death immediate pro-rated vesting of unvested awards given to beneficiaries permitted within 90 days
All other Good Leavers, receive pro-rated proportion of awards as determined by the Board

Bad Leavers

Includes employees leaving the organization voluntarily or due to termination or other reasons to be determined by the Board
Forfeit all outstanding (unvested) awards under the program

Implementation Steps

Company to set up and ‘fund’ with employee share allocation
Company to determine fund operating guidelines
Cost benefit model - inputs, assumptions, and outputs
Finalize proposed fund costing and Board approval
Finalize fund documentation
Company awards eligible employees

Disclaimer: The long-term incentive calculator provides estimates only and is not financial, tax, or legal advice.

Recommended Resources

For a complete picture of your incentive structure, pair this with the Short Term Incentive Calculator to model how your annual bonus pool and KPI based payouts work alongside your long term plans.

If your sales team is part of your retention strategy, the Sales Incentive Calculator helps you model their monthly commission payout before you layer in any long term equity or savings plan on top.

If the Five Year Thrift/Savings Plan caught your attention, the Employee Savings Plans Calculator lets you track company match tiers, vesting milestones, and your total accumulated balance year by year.