phantom stock plan

Phantom stock plan

An incentive scheme that awards management bonuses based on increases in the market price of the company's stock.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
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Phantom stock plan. This plan entitles employees to receive cash or stock in an amount equal to the value of an equivalent number of shares of company stock, or the appreciation in value of an equivalent number of shares of stock since the date the units were awarded upon the occurrence of one or more predetermined events--e.g., a change in control of the company or the participant’s retirement at or after age 65.
Merging an organization into an ESOP structure and a phantom stock plan can create new incentives and retirement avenues for the merging partners.
A phantom stock plan is another form of DCA in which there is a deferred cash benefit but no actual stock ownership.
Phantom stock plans are a form of nonqualified deferred compensation made available to select employees.
We determined that a phantom stock plan best addressed the client's need.
A phantom stock plan is essentially a special type of deferred bonus arrangement, usually based on the fair market value of the shares of the employer corporation.
The difference between a phantom stock plan and SARs is that the grantee of a phantom stock unit typically receives, as part of the grant, the full value of a share of stock, while the grantee of a SAP.
A phantom stock plan requires payment of cash by the company to the employee with no issuance of stock.
• How a phantom stock plan can increase engagement and build an ownership mindset
A bonus stock or phantom stock plan ties the executive's benefits to the growth of the business.
Example 2: The facts are the same as in Example 1, except that R grants employees a phantom stock plan (rather than a restricted stock plan).
However, a phantom stock plan, which provides the employee with a payment equal to the value of stock at a given time, is treated as a deferral of compensation under the regulations.