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A phantom stock plan is a deferred compensation plan that awards the employee a unit measured by the value of a share of a companys common stock, or, in the case of a limited liability company, by the value of an LLC unit. However, unlike actual stock, the award does not confer equity ownership in the company.
Phantom stock is an employee benefit where selected employees receive benefits of stock ownership without the company giving them actual stock. It is worth money just like real stock, and its value rises and falls with the companys actual stock (or what the company is valued at, if its not a publicly traded company).
This type of plan is sometimes referred to as shadow stock. Rather than getting physical stock, the employee receives mock stock. Even though its not real, the phantom stock follows the price movement of the companys actual stock, paying out any resulting profits.
This type of plan is sometimes referred to as shadow stock. Rather than getting physical stock, the employee receives mock stock. Even though its not real, the phantom stock follows the price movement of the companys actual stock, paying out any resulting profits.
The answer involves two variables: (a) the presumed value of the company, and (b) the number of shares to be used in the plan. Once these two answers are known, the phantom share price is calculated as the former (the value) divided by the latter (the number of shares).
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Phantom stock payouts are taxable to the employee as ordinary income and deductible to the company. However, they are also subject to complex rules governing deferred compensation that, if not properly followed, can lead to penalty taxes.
A phantom stock plan is an employee benefit plan that gives selected employees (senior management) many of the benefits of stock ownership without actually giving them any company stock. This type of plan is sometimes referred to as shadow stock. Rather than getting physical stock, the employee receives mock stock.
A phantom stock plan is an employee compensation plan in which an employee is offered phantom shares that track the value of the companys actual stock. Its important to highlight that phantom shares are not actual equity, though their value does rise and fall in accordance with the value of the companys stock.
Phantom stock is a contractual agreement between a corporation and recipients of phantom shares that bestow upon the grantee the right to a cash payment at a designated time or in association with a designated event in the future, which payment is to be in an amount tied to the market value of an equivalent number of
Phantom stock is not a good idea if the company is planning on issuing them to most or all employees, especially if the shares will be paid out when the employee leaves the company or retires. In that case, phantom shares may be ruled illegal because of the Employee Retirement Income and Security Act (ERISA).

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