Phantom Stock Award

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Phantom Stock Award

A type of incentive grant in which the recipient is not issued actual shares of stock on the grant date but receives an account credited with a certain number of hypothetical shares. The value of the account increases over time based on the appreciation of the stock price and the crediting of phantom dividends. Payout may be settled in cash or stock.

Phantom Stock Award

A plan to compensate senior management of a publicly-traded company in which the company grants an employee a "hypothetical" stock. That is, the company gives the employee the benefits of owning stock in the company without actually giving him/her stock. The phantom stock increases or decreases in price and pays dividends as if it were real. Eventually, the phantom stock is settled and cash is distributed to the employee. See also: Stock option.
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Deferred compensation plans range from cash incentive plans, stock appreciation rights, phantom stock plans and restricted executive benefit plans.
Phantom stock plans are a form of nonqualified deferred compensation made available to select employees.
The incentives include stock options (both qualified and non-qualified) with a buy-back agreement, phantom stock plans, non-qualified deferred compensation and cash bonuses.
Beyond those exceptions, section 409A applies broadly to salary reduction plans, supplemental employee retirement plans (SERPs), parachute payments, phantom stock plans, severance plans, insurance commissions, discounted stock options, certain SARs, non-excluded fringe benefits, etc.
The shift today within private firms has been in the direction of phantom stock plans that are capital event--driven.
But offering multiple retirement plans -- and in some cases; phantom stock plans -- shows they're rising to the challenge.
These plans are often described as full value phantom stock plans.
Reduce your labor force, if appropriate, by consolidating the workflow; eliminate overtime without written authorization; offer bonuses to employees for introducing new employees to the company, thereby saving a personnel agency fee; reevaluate the company's bonus policy; and consider using non-cash bonuses such as stock options and phantom stock plans.
The only specific forms of compensation for which the institutions expressed strong sentiments were incentive and non-qualified stock options and cash bonuses (in favor), and phantom stock plans and stock appreciation rights plans (disfavor).
Corporate-owned life insurance can be one of the most cost-effective and tax-advantaged methods of funding nonqualified benefit plans including supplemental executive retirement plans (SERPs), 401(k) overlay plans, supplemental executive life insurance plans and phantom stock plans.
Included are severance payments, bonus deferral arrangements, supplemental executive retirement plans (page 383), phantom stock plans (page 491), stock appreciation rights (page 491), and nonqualified stock options (page 482).
Phantom stock plans have the same accounting effects as SARs.