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Phantom stock is a contractual agreement between a corporation and recipients of phantom shares that bestow upon the grantee the right to a cash payment at a designated time or in association with a designated event in the future, which payment is to be in an amount tied to the market value of an equivalent number of shares of the corporation's stock. [1]
Phantom stock provides a cash or stock bonus based on the value of a stated number of shares, to be paid out at the end of a specified period of time. SARs may not have a specific settlement date; like options, the employees may have flexibility in when to choose to exercise the SAR. Phantom stock may pay dividends; SARs would not.
Despite the ghostly name, phantom stock is not quite as mysterious as it sounds. In essence, phantom stock is a deferred compensation plan that gives an employee a stake in a company’s success ...
While a higher salary and company car has obvious uses, obscure rewards like phantom stock plans can be … Continue reading → The post What Is a Phantom Stock Plan for Employees? appeared first ...
The vesting of shares and the exercise of a stock option may be subject to individual or business performance conditions. Various types of employee stock ownership plans are common in most industrial and some developing countries. Executive plans are designed to recruit and reward senior or key employees.
As with phantom stock, it is normally paid out in cash, but may be paid in shares. [20] phantom stock – A promise to pay a bonus in the form of the equivalent of either the value of company shares or the increase in that value over a period of time. [20] employee stock purchase plan (ESPP)
Phantom stock usually gives the best results, as it gives an employee of a company using the technique a motive for staying with the company and making it grow, since the stock increases in value alongside the company. To create a contract that benefits both the employee and the company, a legal team should be contacted in order to discuss ...
Employee stock purchase plans (ESPPs) are a program run by companies for their employees, enabling them to purchase company shares at a discounted price. These schemes may or may not qualify as tax efficient. In the U.S., stock options granted to employees are of two forms, that differ primarily in their tax treatment. They may be either: