Phantom Stock Plan

What Does Phantom Stock Plan Mean?

A phantom stock plan is an employee benefit typically offered to a company’s upper management as an incentive. It promises to pay the employee a sum of money at a specified time, based on the appreciation of the company’s stock value.

Phantom stocks are also referred to as shadow stocks, synthetic equity, or simulated stock.

Insuranceopedia Explains Phantom Stock Plan

Phantom stocks derive their name from the fact that they are not actual stocks but instead reflect the value of real stocks. When the value of the real stocks rises, so does the value of the phantom stocks.

Employees in this plan receive the cash value of the phantom stocks at a future date. This payout may be given as a performance bonus or as a reward for long-term service.