What's LTIP is it better or worse that RSUs?
Could someone who is receiving a Long Term Incentive Plan explain the difference of the perk compared to stock options? Saw that Hulu gives out LTIPs and was wondering what this was...
LTIP’s are generally cash based bonuses that you receive in yearly increments (similar to how RSUs vest). They can be based on personal performance or company performance or a combo of the 2. If you received an LTIP bonus of $20k it would likely pay $5k each year for 4 years. The longer you stay the more you get and the additional LTIP bonuses you can receive. After 4 years you’ve likely received 4 that are each vesting 25% each year.
At Hulu, you receive an LTIP grant each year. Each grant given pays out over three years. Most of each grant is guaranteed/fixed and then a smaller portion is based on performance. What's nice is that the LTIPs stack, so on the end of year two you're receiving your second installment of the year 1 LTIP and the first installment of the year 2 LTIP. As far as RSU vs LTIP it depends on the company. If you're at a FAANG or a high/fast growth company, you're likely to earn more than with LTIP for your level. For example, I've seen RSU grants at Facebook for $280k vesting over four years for equivalent level $210k LTIP, and if FB stock goes up that $280k could turn into much more. But, if FB stock goes down, then you're fucked! The performance portion of the LTIP can't vary much. I forget the numbers but it's something like 40% or 50% of a small portion to begin with (around 20% of the LTIP).
Not sure about Hulu specifically but LTIPs are not tied to the performance of the business like stocks/options would be. They don’t grow or shrink due to the market.
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That's not how Hulu's works. There's a large fixed portion and a performace portion that fluctuates.