Preserve Ownership with Phantom Stocks
Customized phantom stock plans with scenario modeling, pool setup, tracking and much more!
Customized phantom stock plans with scenario modeling, pool setup, tracking and much more!
Phantom stocks, or shadow stocks, are an employee benefit plan that simulates real company shares without granting actual ownership. The value of these mock stocks is tied to the company's stock price, and employees receive pay-outs after completing a designated vesting period.
What kind of performance metrics need to be incentivized- Sales, attracting or retaining new talent, reaching key milestones etc.
Consider performance levels, job roles or contributions to determine which employee groups will benefit the most.
Set vesting, cliff periods, triggers, and dividends, then choose between appreciation-only, full value, or performance-based plans.
Clarify stock plan details to participants, covering benefits, eligibility, vesting, payout triggers, and more, then obtain formal acceptance.
Track events that trigger payouts such as termination, vesting completion, company sale, or IPO. Make timely and accurate payments to the participants.
Employees are granted Phantom stocks at a specific price on a particular date
Requires a minimum time for payment to encourage employee retention
Vested phantom units deliver a cash reward to employee's equivalent to stock growth since the grant date
The company pays out the value of the phantom units in cash, not in company stock
Benefit only from an increase in the company's stock price since the grant date
Payouts are linked to performance metrics (e.g., sales, revenue growth), increasing with goal achievement.
Payout based on the current market value of the stock, including both appreciation and the original grant price
Not subjected to the same level of scrutiny compared to ESOPs, as it doesn't involve actual shares its trading.
Must be recognized in the financial statement to comply with accounting standards as they are treated as liability.
Compliance with employment laws, particularly those related to anti-discrimination and equal pay regulations are required for them.
Phantom stocks themselves are not taxable, but the payouts triggered by them are subject to taxation.
