Long-term incentive plans (LTIPS): Cash vs. Equity

This paper explores the differences between cash-based and equity-based Long-Term Incentive Plans (LTIPs) and how to choose between them based on various factors. Cash-based LTIPs offer executives a guaranteed cash reward when certain performance targets are met, while equity-based LTIPs offer stock options or restricted stock units (RSUs) that align executives' interests with those of the company and its shareholders. The choice between the two types of LTIPs depends on industry practices, the company's stage of growth, business strategy, shareholder interests, and executive perceptions. It provides insights into these factors and how they affect the choice of LTIPs.