Document background
The Phantom Stock Agreement serves as a crucial tool for Canadian companies seeking to provide employees with equity-like incentives without diluting actual shareholding. This document is particularly valuable for private companies, subsidiaries of foreign corporations, or organizations with complex ownership structures where traditional equity sharing may be impractical. The agreement defines the terms of a phantom stock plan that synthetically replicates stock ownership, providing participants with cash payments based on the company's value appreciation. It addresses key aspects such as grant terms, vesting conditions, valuation methodologies, and payment triggers, while ensuring compliance with Canadian tax laws, securities regulations, and employment standards. The document is typically implemented as part of a comprehensive compensation strategy to attract, retain, and motivate key employees while maintaining existing corporate structures.
