.svg)
Glossary Terms
Compass - The Only Sales Glossary You Need
Long-term incentive compensation (LTIC) is a performance-based reward system designed to motivate sales representatives to achieve sustained organizational goals over an extended period, typically beyond one year.
It aligns employee interests with those of the company, driving performance and fostering loyalty. LTIC is often used for sales reps and senior executives to encourage long-term success and accountability.
Long term incentive compensation refers to rewards that are offered to employees, especially in sales and leadership roles, to drive sustained performance over a period of several years.
These incentives are typically performance-based and designed to align individual goals with long-term business outcomes. Common examples include stock options, performance shares, and restricted stock units (RSUs).
LTIC plans can take various forms, tailored to organizational needs and roles. Common types include:
Long term incentive compensation offers several advantages for sales teams, including:
A long term incentive compensation plan is a performance-based reward system designed to motivate sales professionals to achieve strategic goals over a multi-year period.
Unlike short-term bonuses, it focuses on sustained success and retention. In sales, it typically includes equity awards, deferred cash bonuses, or performance shares tied to metrics like revenue growth, client retention, or deal size.
These incentives vest over time, ensuring alignment with the company’s long-term vision and promoting consistent high performance.
For sales teams, motivation often revolves around immediate rewards. However, a long term incentive compensation plan adds another layer by encouraging strategic thinking and customer relationships that pay off over time.
It helps reduce turnover, builds loyalty, and promotes behaviors that support the company’s long-term success, not just quarterly quotas.
A typical long term incentive compensation plan sets performance goals tied to revenue growth, customer retention, or market expansion. These incentives are awarded in the form of equity or deferred cash bonuses that vest over time. The delayed nature of the reward ensures sustained performance and fosters loyalty.
To design a high-impact long term incentive compensation plan for sales roles:
While both long term and short-term incentives (STIs) aim to motivate sales representatives, they differ in keyways:
