The Delaware Book Value Phantom Stock Plan is a unique employee compensation plan offered by First Florida Banks, Inc. This plan is designed to incentivize and reward employees based on the book value of the company's stock. By utilizing this plan, First Florida Banks aims to align employee interests with shareholder value. Now, let's dive deeper into the details of what this plan entails and its potential benefits. The Delaware Book Value Phantom Stock Plan is structured in such a way that it mimics actual stock ownership without actually issuing real shares to employees. Instead, employees are granted phantom stock units that mirror the book value of the company's stock. The value of these units is tied directly to the performance and growth of the company. Employees who participate in this plan become eligible for the accumulation of phantom stock units over a predetermined period. The number of units allocated to an employee is usually determined based on various factors such as position, tenure, and individual performance. These units steadily grow in value parallel to the book value of the company's stock. One key advantage of this plan is that employees have the potential to earn significant rewards if the company's book value increases over time. This helps to foster a sense of ownership and motivates employees to perform at their best, ultimately benefiting both the individual and the company as a whole. Additionally, the Delaware Book Value Phantom Stock Plan can provide employees with a sense of long-term financial security. As the plan is designed to reward employees based on the book value of the company's stock, it encourages them to stay committed to the organization, fostering employee loyalty and reducing turnover. It's worth noting that there might be variations of the Delaware Book Value Phantom Stock Plan offered by First Florida Banks, Inc. Different variations may exist to accommodate employees at different levels within the organization or align with specific business objectives. Examples of potential variations could include Executive Delaware Book Value Phantom Stock Plan, Management Delaware Book Value Phantom Stock Plan, or Employee Delaware Book Value Phantom Stock Plan. In conclusion, the Delaware Book Value Phantom Stock Plan is an innovative compensation plan utilized by First Florida Banks, Inc. to motivate and reward employees based on the book value of the company's stock. By linking employee compensation to the company's performance, this plan helps create a sense of ownership, incentivizes long-term commitment, and ultimately contributes to the overall success of the organization.
Delaware Book Value Phantom Stock Plan of First Florida Banks, Inc.
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FAQ
Phantom shares are usually paid out when the company gets acquired or IPOes. The phantom shares are paid out in cash for their corresponding value.
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).
Qualified plans, such as 401(k) programs, are subject to all of the rules and restrictions of ERISA. Nonqualified plans, including most phantom stock plans, are not.
How Phantom Stock Plans Are Taxed. Payments from phantom stock plans are subject to typical income taxes, not capital gains taxes. In turn, companies can deduct phantom plan payouts the year the employee reports the income.
Phantom stock is a contract between an employer and an employee that grants the employee the right to receive a payment based on the value of the employer's stock. When granting phantom stock, the employer does not grant the employee any shares of the employer's stock.
Phantom stock plans are considered ?liability awards? for accounting purposes (assuming they will be settled in cash rather than stock). As such, the sponsoring company must recognize the plan expense ratably over the vesting period. Varying accrual schedules can be found in the market.
The definition of Exit Event used in this form phantom plan complies with Section 409A as the plan is designed so that awards are settled upon an Exit Event or, if earlier, a termination of a participant's employment, which is also a permissible payment event for purposes of Section 409A.
A cash payment from Company A as the difference between the current common share price and phantom stock issue price: ($70 ? $50) x 500 = $10,000; or. A cash payment from Company A equal to the current common share price: $50 x 500 = $25,000.