Management incentive plan (MIP)

Also called: MIP, management carve-out

In one line

A pool of equity or proceeds set aside to reward key management, sometimes carved out of exit proceeds ahead of common.

In plain English

A MIP (or carve-out) reserves value for executives, often paid at an exit before, or alongside, common holders. It can reduce what ordinary employees receive in a sale.

If you were explaining it to a 5-year-old

A special stash of extra prizes set aside just for the club's top helpers, taken out before the rest is shared.

Why it matters when you sell

A management carve-out can dilute common proceeds at exit, so it's worth knowing if one exists when valuing your shares.

Put it to use

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Sources

A general market-practice term. See how we define and source the glossary in our methodology. General information, not advice.

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Management incentive plan (MIP)

Related terms

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