Small businesses have many options to provide their employees with meaningful ways to participate in the success of the small business, including stock options, rights plans, restricted stock, long - term incentive plans and phantom stock plans. (simplicitylaw.com)
One wrinkle is that an employee would need to receive more phantom stock relative to direct ownership to get the same amount of equity compensation because they are not receiving the underlying value of the stock. (inc.com)
Employees like it because there are no tax consequences of receiving phantom stock and they still have an incentive to help the company grow its value. (inc.com)