With more than $1 trillion in private equity capital flowing into mid- and large-cap companies in 2025, aligning executive talent with sponsor returns is essential. However, without public stock to offer, PE-owned companies rely heavily on long-term incentives. That’s how they attract executives who can turn an investment thesis into a payday.
The big picture . WTW’s 2026 Portfolio Company LTI survey points to two notable shifts since its 2023 edition: profits interest units have exceeded stock options as the most common equity vehicle and Multiple of Invested Capital (MOIC) is increasingly the metric of choice.
The 10% rule still wins:
- The median LTI pool remains 10% of undiluted shares outstanding, with 75% granted at investment. The rest is reserved for new hires, promotions and special awards.
- PE sponsors continue to favor big, front-loaded grants over smaller annual awards, focusing executives on the investment from day one.
- The CEO takes roughly 23% of the pool, the CFO 7%, and other C-suite leaders about 3% apiece. Plans are deliberately narrow—median participation is just 15 people, or about 2% of the workforce.
- Leaders not in the LTI plan are typically awarded cash-based long-term bonus plans.
Profits interest units are used in half of plans edging out stock options (30%) and restricted shares (28%). The appeal is straightforward: in LP and LLC structures, PIU earnings can qualify for long-term capital gains treatment—a tax advantage not permitted for corporations.
Performance conditions now touch most plans , with 28% of respondents linking them to every award and another 43% tie some performance objectives.
- 79% of respondents use MOIC. This measure is about sponsor returns, not the portfolio company’s operating performance.
Rollovers are rare . Only 32% of sponsors required executives to roll over proceeds (typically 20%), and 84% offered no match or discount as a sweetener.
The bottom line : Deal size, industry, hold period and retention needs should all shape plans. But, when possible, the LTI converts executives into co-investors who think like owners, weigh decisions against exit value and align with the PE firm’s agenda.
