|
Equity Compensation 101
By Gary T. Moyer, April 11, 2000
Phantom Stock - Taxation
- The employee is generally not taxed until he receives the cash
- The arrangement is structured as a mere unfunded and unsecured promise by the Company to pay the employee cash in the future based on an "extrinsic" unit of measurement.
- When the cash is received by the employee, the employee recognizes ordinary income (and the Company gets a wage deduction) in the amount of cash the employee receives
|
