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.

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.

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.
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Merging an organization into an ESOP structure and a phantom stock plan can create new incentives and retirement avenues for the merging partners.
8226; When a company should consider implementing a phantom stock plan
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.
One solution: the life insurance-funded phantom stock plan, which ties the executive's compensation to the employer's performance without diluting the owner's controlling interest in the company.
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.
A bonus stock or phantom stock plan ties the executive's benefits to the growth of the business.