Phantom Equity Emerges as Key Value-Sharing Alternative to Stock

Irvine, CA, October 05, 2012 --(PR.com)-- Private companies wanting to reward business growth without giving away equity are turning more and more to phantom stock, according to Tom Miller, President of The VisionLink Advisory Group (a compensation consulting firm headquartered in Irvine, CA). Closely-held business owners are seeing this value-sharing approach as better for all stakeholders and an effective strategic tool in their overall pay approach.

“Most of the calls we receive these days are on this topic,” Miller explains. “Business owners are anxious to create a focus on building future value among their key producers and move away from simply paying above market salaries to people they want to attract or retain. Phantom stock is really the ideal solution in those situations.”

Most business owners, according to Miller, are reluctant to dilute their equity by sharing actual stock. So, the phantom stock approach allows them to simulate participation in company ownership without giving real shares away. Employees benefit because: they don’t assume the liability of an owner; they have a deferral of income tax until they receive a distribution of their accrued value, and; they don’t have to find a buyer of their shares to receive value under the plan. The compensation consultant indicates, “it’s just an ideal way to create the long-term focus most business owners want and in a way that is ‘self-financing.’ No value is paid out unless and until it’s created.”

Miller plans to address this issue thoroughly in a free webinar broadcast on October 23rd entitled, “What is Phantom Stock and Why do I Keep Hearing about It?” (More information and registration for this event can be accessed at: http://www.vladvisors.com/business-growth-strategies/event-details.aspx?ID=102.)

The VisionLink founder is quick to explain that phantom stock is not the only way to provide a long-term incentive for employees of a growing company. Ultimately, there are about nine different types of plans that can be considered when trying to determine the best way to share value with those who help create it in the business. These can include various types of stock or stock option arrangements, profit pools, performance unit plans and strategic deferred compensation.

“When I speak with business owners, I try to assess what outcome they are trying to achieve, or the problem they are trying to solve, before advising them which approach might be best,” Miller added. “We’re not saying phantom stock is for everyone, but more often than not it fills multiple objectives the company is trying to achieve. At the end of the day, the idea of a plan that rewards company growth appeals to private company owners. They want employees to think like owners and rewarding them with a plan like phantom stock creates that kind of mindset.”

More information about phantom stock and other types of long-term value sharing arrangements can be accessed at http://www.phantomstockonlne.com. VisionLink recently launched that website to help answer the many questions business leaders have about these types of plans.