How are phantom shares created?

Rather than getting physical stock, the employee receives mock stock. Even though it's not real, the phantom stock follows the price movement of the company's actual stock, paying out any resulting profits.

What are phantom stock plans?

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.

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Phantom Stock Plan of Hercules...

Kings New York Phantom Stock Plan of Hercules, Inc.

Name: Kings New York Phantom Stock Plan of Hercules, Inc.
Brand: US Legal Forms
Rating: 4.77 (439 reviews)

Category:

Corporations - Public - Disclosure and Notices

State:

Multi-State

County:

Kings

Control #:

US-CC-24-258

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Instant download

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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 stock is not a good idea if the company is planning on issuing them to most or all employees, especially if the shares will be paid out when the employee leaves the company or retires. In that case, phantom shares may be ruled illegal because of the Employee Retirement Income and Security Act (ERISA).

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.

Phantom stock is a contractual agreement between a corporation and recipients of phantom shares that bestow upon the grantee the right to a cash payment at a designated time or in association with a designated event in the future, which payment is to be in an amount tied to the market value of an equivalent number of

5 Tips for Creating a Phantom Stock Plan Understand what you are and aren't offering. Phantom stock is essentially a contract in which you promise to pay cash to an employee once certain conditions are met.Set a proper valuation.Create your shares.Decide how to award stock.Set a reward schedule.

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.

Rather than getting physical stock, the employee receives mock stock. Even though it's not real, the phantom stock follows the price movement of the company's actual stock, paying out any resulting profits.

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.

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.

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.

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Kings New York Phantom Stock Plan of Hercules, Inc.

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