phantom stock plan

Phantom Stock Plan

An employee benefit plan that gives selected employees (senior management) many of the benefits of stock ownership without actually giving them any company stock. Sometimes referred to as "shadow stock."

Notes:

Rather than getting physical stock, the employee receives "pretend" stock. Even though it's not real, the phantom stock follows the price movement of the company's actual stock, paying out any resulting profits.

See also: Employee Contribution Plan, Employee Stock Option, Golden Handcuffs, Stock, Stock Option

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Phantom stock plan

An incentive scheme that awards management bonuses based on increases in the market price of the company's stock.

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phantom stock plan

An incentive plan for a firm's executives in which the executives are offered bonuses based on increases in the market price of the firm's stock. A phantom stock plan is supposed to induce the executives to act in the best interests of the shareholders.