phantom stock plan
- A method of providing additional compensation to employees that involves them being given units that mimic actual shares in the company. These can be exchanged for the market value of the equivalent number of company shares at a predetermined date in the future. However, until that date arrives, they cannot be transferred, carry no cash value, and do not yield any of the non-monetary benefits, like voting rights, that come with typical stock ownership
- The company offered a phantom stock plan as an incentive to its key employees to drive continued growth.
- Under a phantom stock plan the employee doesn't actually own company shares, but still benefits from any increase in their value over time.
- Some companies choose to incentivize their employees through phantom stock plans instead of granting them actual shares, especially when they want to avoid diluting the voting rights.