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Equity Compensation 101
By Gary T. Moyer, April 11, 2000
Phantom Stock
- Phantom What?
- Phantom Stock plans are basically a contractual promise by the Company to treat the employee as owning all or a portion of Company stock, but with no actual sale of stock and no actual grant of an option to purchase stock
- In other words, the value of the Company’s stock is used to measure the employee’s compensation, but the employee is paid in cash, not stock
- The employee is awarded a phantom "unit," which is a mere book entry entitling the employee to receive, either on exercise or at a stipulated time in the future, either the appreciation in value of the unit since the date of grant or the entire unit value
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