Orange California Book Value Phantom Stock Plan of First Florida Banks, Inc. is a unique compensation program designed to reward employees of the bank based on the book value of the company's stock. This plan is exclusive to the employees of First Florida Banks, Inc. located in Orange County, California. The plan provides a non-cash incentive for eligible employees, allowing them to receive value based on the performance of the company's stock over time. The Orange California Book Value Phantom Stock Plan operates by offering phantom stock units to employees. These units conceptually represent shares of the company's stock, but do not actually grant shareholders' rights. Instead, employees are granted a proportionate value of the increase in book value of the stock, which is determined by an established formula. This book value represents the net asset value of the company, and is reflective of its financial health and overall performance. By offering phantom stock units, First Florida Banks, Inc. aims to align the interests of its employees with the company's shareholders. When the book value of the company's stock increases, employees participating in the plan receive a payout, which can be a significant financial incentive. This provides a unique opportunity for employees to participate in the growth and success of the company, without directly buying or owning actual shares of stock. The Orange California Book Value Phantom Stock Plan has different variations to accommodate employees at different levels within the bank. These variations may include executive or managerial tiers, as well as employee-specific criteria. By tailoring the plan to different employee groups, First Florida Banks, Inc. aims to incentivize and retain key talent while ensuring that the plan remains fair and equitable for all participants. In conclusion, the Orange California Book Value Phantom Stock Plan of First Florida Banks, Inc. is a distinctive compensation program that offers employees a non-cash incentive based on the book value of the company's stock. With different variations to accommodate employees at various levels, this plan provides a unique opportunity for employees to participate in the financial success of the company.
Orange California Book Value Phantom Stock Plan of First Florida Banks, Inc.
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Take a look at five tips for creating a phantom stock plan below: Understand what you are and aren't offering.Set a proper valuation.Create your shares.Decide how to award stock.Set a reward schedule.
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.
For both phantom stock and SARs, employees are taxed when the right to the benefit is exercised. At that point, the value of the award, minus any consideration paid for it (there usually is none) is taxed as ordinary income to the employee and is deductible by the employer.
The phantom stock becomes a liability that the company must eventually convert to either cash or company stock. In privately held businesses, company stock is rarely an option. employees like these plans as any phantom stock they receive is not taxable until converted into cash by the company.
A phantom stock plan is a deferred compensation plan that awards the employee a unit measured by the value of a share of a company's 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.
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.
In conjunction with generally accepted accounting standards, a phantom stock plan is accounted for as a deferred cash compensation plan because the employee receives the increase in the value of an underlying number of shares or units over a specific period of time in the form of a cash payment on a specified date.
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).
As the phantom stock units become vested, the value of the phantom stock units is includible as wages subject to FICA taxes. This is the case even though the amounts are not subject to income tax until actually paid to the employee.
Full Value Where appreciation-only phantom stock pays out the difference between the shares' initial value and their current value, full-value phantom stock pays out exactly what it's worth. For example, let's say that Mary is granted 500 phantom shares on June 5, 2020, for the company she works for.