Fast-growing firms looking to engage leading talent can leverage reward systems which embrace longevity and value-alignment as well as financial renumeration. In particular, they're responding to the sustainable, flexible, personalised appeal of Long-term Incentive Plans (LTIPs).
The LTIPping point for engaging executive talent
LTIPs are designed to reward senior leaders and incentivise them to support company goals, usually over a period of 3-5 years. Although these schemes are not new, they have become increasingly popular: 84% of FTSE 100* now incorporate LTIPs into comp packages* compared with 30% in the mid-90s* (back when Ryder Reid was founded!)
In the legal exec world, for those U.S. firms experiencing rapid growth or moving to the C-suite model, it’s worth considering the power of LTIPs for:
A fantastic canvas for decision-makers to be creative with offers and explore options beyond salary and traditional benefits, we are seeing LTIPs built into talent packages across the legal and wider professional services industries, and giving growing firms the crucial advantage in securing elite global talent.
The flexibility and potential of LTIP metrics
In the early 2000s, when I first started working in the exec market, long-term incentives were simpler and largely limited to stocks and shares. How things have changed! The diversity of modern LTIP schemes has transformed negotiations, and in wonderful parallel with the ascent of priorities like sustainability and inclusion. So what re some of the most innovative LTIPs metrics currently embraced by those employers leading the way?
Environmental, Social & Governance (ESG)
Across the FTSE 100, ESG standards account for a remarkable 20% of the metrics in LTIP schemes*, meanwhile the share of EU companies adopting this incentive has doubled between 2021 and 2023*. Including ESG metrics in financial incentives has the dual benefit of boosting motivation and empowering your most business-critical leaders to align earnings with meaningful impact.
Talent management
Firms can build human capital into their leadership incentives, incorporating metrics across organisational diversity, employee engagement, progression, and other people-focused outcomes. This is a fantastic development for talent management and a real boost for inclusion, job satisfaction, and other indicators of work happiness and wellbeing.
Reputation
Recognising the link between employee motivation and customer satisfaction, some pioneering businesses are embedding metrics relating to brand (Net Promoter Score, customer retention rates) into their vesting conditions.
This is a far more complex landscape than we have seen before, and it opens new realms of possibility for law firms and their execs who want to drive forward with their values and have real-world impact as they grow together.
Why are LTIPs so attractive to exec talent?
LTIPs offer so much more than financial upside. As well as being a fantastic motivator (thanks to the correlation between business goals and personal ambitions), they offer your leaders more control over their future with you, including their ongoing trajectory at the firm and financial security beyond traditional salary and benefits.
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Aligning goals with personal ambitions: where traditional bonus and shares schemes tend to centre around a standardised rate, execs can influence the detail of LTIP agreements – what they want to be measured on, how they want to be measured, which rewards most motivate them and so on.
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A gateway to future stability: we’ve recently had C-suite clients accept offers in which their LTIP includes financial reward for fulfilling a set tenure (a strategy some firms implement across their leadership teams to retain excellence as well as consistency in vision and goals). This is a brilliant and attractive addition for leaders who really care about job security, loyalty and building strong affiliations.
We work closely with our global network of execs to help unlock what really matters to them in the search for their next employer, and we love to see them empowered to influence their financial agreements alongside the other fundamentals of their offers. Growing employers can tap into this prioritisation of long-term agreements as a key deciding factor, not least to engage the people they really want at the helm of their business.
People-first wins (again!)
As well as driving economic, human and cultural value, well-crafted LTIPs are a statement that your firm invests in its people as much as in its future, and demonstrate a genuine commitment to the satisfaction and success of your most business-critical employees. This is an exciting prospect for employers who want to strap their growth targets to their talent and ambitions, and one we champion wholeheartedly!
Essentially, LTIPs are a key strategic lever for engaging top executive talent, and we’re consistently seeing how they serve growing firms and their leaders. For personalised guidance for developing your benefits offerings, contact our Exec Search hub. Or, if you’re a talented exec looking to make your next move – we’re here for you too.
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Written by Andrea Prendergast, Ryder Reid Legal Co-owner and Director of Executive Search. Andrea started her recruitment career in 1998 in her hometown of Liverpool. She moved to London and joined Ryder Reid in 2008, becoming a director and shareholder three years later, before buying the business in 2018 with Callum Smith.
***References***
Deloitte study of Gen Z and Millennial professionals
LTIPS usage across FTSE 100 in the 90s
Modern LTIP usage across FTSE 100
PWC report on EU companies adopting ESG in LTIPs
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