What's LTIP is it better or worse that RSUs?

New Ss7cEn
Jul 10, 2019 6 Comments

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...


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TOP 6 Comments
  • 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).
    Jul 11, 2019 0
  • Netflix / Product Thats_It
    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.
    Jul 10, 2019 3
    • That's not how Hulu's works. There's a large fixed portion and a performace portion that fluctuates.
      Jul 11, 2019
    • Netflix fMCE7GKL
      Yup, basically it's fixed guarantee price per share. Think of it as cash allocation typically distributed annually over 4 years.
      Jul 11, 2019
  • Snapchat gho$tface
    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.
    Jul 10, 2019 0


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