Virgin Islands Phantom Stock Plan of Hercules, Inc.

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Multi-State
Control #:
US-CC-24-258
Format:
Word; 
Rich Text
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This sample form, a detailed Phantom Stock Plan document, is a model for use in corporate matters. The language is easily adapted to fit your specific circumstances. Available in several standard formats.
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FAQ

Phantom shares usually get liquid when the company gets acquired or goes public or if the company decides to do a buyback. Any gains from the assets must be reported to tax authorities as ordinary income upon vesting.

On redemption, in a phantom stock plan, the plan participant receives a cash payment. This is in comparison to a stock option plan, where the plan participant receives common stock. As a result, a phantom stock plan allows the participant to reap the benefits of an increasing share price without shareholder dilution.

However, phantom stocks come with a considerable amount of disadvantages that can diminish participants' perceived control and influence, strain company liquidity, require extensive administrative efforts, introduce tax complexities, create disagreements, and subject participants to volatility in financial benefits ...

While not stock in the company, phantom stock is worth money just like real stock? its value rises and falls with the company's actual stock (or what the company is valued at, if it's not a publicly traded company). Employees are paid out profits at the end of a pre-determined length of time.

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.

A phantom stock plan, also called a shadow stock plan, is a type of deferred employee compensation plan where the type of shares issued to plan participants are phantom shares instead of company shares. Phantom shares provide benefits similar to stock ownership but without actually issuing company shares.

Since the benefits of phantom stocks can only be contingent upon the company's performance or predetermined benchmarks, employees with phantom stocks will not get the cash payout if the company does not meet the benchmark. Phantom stocks cannot be freely traded or transferred.

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Virgin Islands Phantom Stock Plan of Hercules, Inc.