Phantom Stock Plan

Published: | Updated: December 30, 2017

Definition - What does Phantom Stock Plan mean?

A phantom stock plan is an employee benefit that is often given to the upper echelon of a company as a form of incentive. It promises to give the employee an amount of money at a certain point, based on the rising value of company stocks.

Phantom stocks are also known as shadow stocks, synthetic equity, and simulated stock.

Insuranceopedia explains Phantom Stock Plan

Phantom stocks get their name from the fact that they are not actual stocks but, rather, mirror the value of the real stocks. When the real stocks increase in value, so do phantom stocks.

Employees under this plan will get its cash value at a certain point in the future. It may be given as a bonus for a performance or as a reward for longevity as an employee.

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