Phantom Equity Agreement Sample

Although the stock is not real, Phantom Stock still tracks fluctuations in the company`s share price, and the payments will come from the resulting profits. This type of stock experiences the same price changes as real stocks and pays dividends. The agreement provides for a financial reward at an agreed date or event in the future. The amount of the reward is related to the market value of the company`s stock at the time of ingration. After a set period of time, participating employees receive the monetary value of the Phantom share. Phantom stock plans can be a valuable incentive compensation method for companies that are looking for a way to attribute it to changes in the value of the business, but do not want to directly assign shares. Below are answers to nine frequently asked questions to give you an overview of Phantom Stock`s plans and what they might mean for your business. one. A Phantom Stock plan is a deferred compensation plan that grants the employee a bonus, measured on the basis of the value of the employer`s core stock. However, unlike the actual stock, the premium does not confer any interest in the company.

In other words, there is no actual stock given to the employee. Instead, the employee receives units from the phantom stick, and the plan provides that each unit is of the same value as a stem action. a. As a general rule, the actual payment of benefits is deferred until a predetermined date or until the termination of the employment relationship due to retirement, death or disability. The Phantom Stock plan should indicate when Phantom Stock payments should begin, to what extent the evaluation of units is usually triggered as described above. In addition, the plan should determine whether the payment of the specified value should be made in a single lump sum or in increments over a one-year period. With respect to staggered payments, the plan should also indicate whether interest is being collected on unpaid payments. When making these provisions, the entity should take into account any phantom stock valuations and the company`s cash flow. Even if payments are made after the termination of the recipient`s service, the method of payment is still, as a general rule, compensation for those who were employed prior to termination.

one. With respect to the Federal Insurance Premiums Act (FICA), deferred compensation is excluded in the later (1) year in which related services are provided or (2) in the year in which deferred compensation is paid. The provision for provision and forfeiture provisions ends with respect to the question of whether the rights are transferred to the executive. If Phantom share units are defused, the value of phantom share units as wages subject to FICA and Medicare taxes is excluded. This is the case, even if the sums are only subject to income tax when they are actually paid to the employee. If the employee`s base salary (before the phantomstock) exceeds the FICA compensation base, no additional FICA tax would be taken on Phantom Stock payments. However, the company and the worker would be subject to Medicare payroll tax, since the Medicare tax is levied on total wages, with no salary cap. Actual employee equity coverage has some drawbacks to the issuance of Phantom Equity. Companies may issue phantom shares for the following reasons: WMS Industries Inc., a Delaware company (the “company”), herely grants shares of “Full_Name” (the “Grantee,” also known as “it”) shares of their Phantom share, pursuant to the terms of the Phantom Agreement and the Restatement of the WMS Industries Inc.

As is used in this Phantom Stock Agreement, your primary employer (“employer”), the company and its subsidiaries and associated companies are collectively referred to as the “employer group.” In general, only selected employees are selected to get Phantom Stock, for example.B. Phantom share plans are compensation agreements