Sample Phantom Stock Agreement Format
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How to fill out Phantom Stock Plan Of Hercules, Inc.?
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FAQ
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 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. 9 frequently asked questions about phantom stock plans RSM US ? ... ? Services ? Business tax RSM US ? ... ? Services ? Business tax
For example, suppose an employee received 10 phantom shares with a starting value of $7, and assume the shares are valued on the payment date at $15. At the date of payment the employee would receive $150 under a ?full value? plan and $80 under an ?appreciation only? plan.
Payments from phantom stock plans are subject to typical income taxes, not capital gains taxes. In turn, companies can deduct phantom plan payouts the year the employee reports the income. Employers must ensure their plans follow federal laws in section 409A of the Internal Revenue Code (IRC).
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.