Phantom Stock Plans

Objectives:

To create a long-term reward structure, consistent with and supportive of the company's objectives that will:

• Provide a balance between annual and longer-term corporate objectives and encourage teamwork among management personnel.
• Provide financial motivation to achieve long-term growth and financial objectives.
• Retain key management personnel.
• Provide increased capital accumulation and retirement opportunity.
• Conserve shareholder equity.
• Phantom Stock emulates real stock without actual ownership of equity.
• Allows the participant to accumulate wealth based on the potential appreciation of the company's value tied to increase in profitability.
• The participant does not" purchase" underlying phantom shares; rather the individual is granted phantom shares and receives the upside increase in value over the original value at grant.
• Phantom share value is calculated based on changes in book value or other specified formula. Value can increase or decrease based on actual financial performance.
• Payout is calculated on the appreciated value of phantom shares over issue value, and is usually distributed in cash at retirement or when a certain age is reached.
• Phantom stock valuation should be based upon the book value of the company or multiple of earnings, or some formula including both.
• Shares are typically granted annually based on a guideline or the discretion of Top Management
• There is usually some vesting requirement and the right to receive awards is based on continued employment or services.
• Phantom stock is taxed as ordinary income and does not require executive financing.

To find out more on how Compensation Resources, Inc. can help your company with Phantom Stock Plans, please contact us or call us directly to speak with our compensation consultants at 877-934-0505.