20-162A 20-162A . . . Book Value Phantom Stock Plan under which Committee of Board of Directors may, from time to time, grant quantity of phantom shares to selected employees, each share being equivalent to one share of corporation common stock. Phantom shares may be exercised at any time within ten years of date of grant (subject to certain limitations in event of termination of employment) Upon exercise, employee is paid cash equal to increase in underlying net book value per share on fully diluted basis of shares between date of grant and date of exercise
Virginia Book Value Phantom Stock Plan of First Florida Banks, Inc.
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How to fill out Book Value Phantom Stock Plan Of First Florida Banks, Inc.?
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FAQ
Phantom stock plans are considered ?liability awards? for accounting purposes (assuming they will be settled in cash rather than stock).
However, phantom stocks come with a considerable amount of disadvantages that can diminish participants' perceived control and influence, strain company liquidity, require extensive administrative efforts, introduce tax complexities, create disagreements, and subject participants to volatility in financial benefits ...
The plan may provide for a single payment, or it may provide for installment payments over a period of time after the phantom stock vests. In some cases, the employer may let the employee elect to receive the payout in the form of an equivalent amount of stock.
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.
Phantom shares are usually paid out when the company gets acquired or IPOes. The phantom shares are paid out in cash for their corresponding value.
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).
It is possible to create a phantom stock plan that avoids the application of 409A rules. The key requirement would be to (a) use cliff vesting (any incremental vesting must trigger immediate payment), and (b) pay benefits within 2½ months of the end of the year in which the awards vest.
As a default, this form plan provides for forfeiture of all unvested phantom stock units upon a participant's termination of employment (subject to the terms of the award agreement).
