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Phantom Stock Agreement

Phantom Stock Agreement Template for Indonesia

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Key Requirements PROMPT example:

Phantom Stock Agreement

"I need a Phantom Stock Agreement for our Indonesian tech startup to grant phantom shares to our senior developers, with a three-year vesting period starting March 2025 and valuation tied to our annual revenue growth."

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Document background
The Phantom Stock Agreement is utilized in Indonesia when companies wish to provide equity-linked compensation without transferring actual ownership shares. This arrangement is particularly common in private companies, foreign-owned subsidiaries, and organizations seeking to align key personnel interests with company performance while maintaining existing shareholding structures. The document complies with Indonesian Company Law, Labor Law, and tax regulations, while providing detailed terms for phantom stock units, including grant conditions, vesting schedules, valuation methodologies, and payment procedures. It's especially relevant in contexts where actual share transfers are impractical due to regulatory restrictions, corporate structure limitations, or strategic considerations in the Indonesian market.
Suggested Sections

1. Parties: Identification of the Company and the Participant entering into the phantom stock agreement

2. Background: Context of the agreement, including the Company's phantom stock plan and purpose

3. Definitions: Key terms including Phantom Stock Units, Vesting Period, Valuation Date, Base Value, and Payment Amount

4. Grant of Phantom Stock Units: Details of the phantom stock units being granted, including number and initial value

5. Vesting Schedule: Timing and conditions for vesting of phantom stock units

6. Valuation Mechanism: Method for calculating the value of phantom stock units

7. Payment Terms: Conditions and procedures for payment of vested phantom stock units

8. Termination Provisions: Rights and obligations upon termination of employment or service

9. Confidentiality: Obligations regarding confidential information

10. Taxation: Tax treatment and responsibilities

11. Governing Law and Dispute Resolution: Choice of law and dispute resolution procedures

12. General Provisions: Standard boilerplate clauses including amendments, notices, and entire agreement

Optional Sections

1. Change of Control: Used when specific provisions are needed for corporate restructuring or ownership changes

2. Non-Competition and Non-Solicitation: Include when the company wants to restrict participant's competitive activities

3. International Provisions: Required when participants are located in multiple jurisdictions

4. Corporate Actions Adjustments: Include when specific provisions for stock splits, mergers, or other corporate actions are needed

5. Clawback Provisions: Used when the company wants right to recoup payments in certain circumstances

6. Administration: Include when detailed procedures for plan administration are needed

Suggested Schedules

1. Schedule A - Grant Notice: Details of specific grant including number of units, base value, and vesting schedule

2. Schedule B - Vesting Schedule: Detailed timeline and conditions for vesting of phantom stock units

3. Schedule C - Valuation Formula: Detailed methodology for calculating phantom stock unit value

4. Appendix 1 - Consent Form: Participant's acknowledgment and acceptance of terms

5. Appendix 2 - Payment Election Form: Form for participant to elect payment timing and method

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Agreement
Applicable Law
Base Value
Board of Directors
Business Day
Cause
Change of Control
Company
Confidential Information
Disability
Effective Date
Fair Market Value
Grant Date
Grant Notice
IDX
OJK
Parent Company
Participant
Payment Amount
Payment Date
Performance Criteria
Phantom Stock Plan
Phantom Stock Unit
Plan Administrator
Reference Price
Retirement
Settlement Date
Subsidiary
Termination Date
Termination of Employment
Unit Value
Valuation Date
Valuation Methodology
Vested Units
Vesting Date
Vesting Period
Vesting Schedule
Relevant Industries

Financial Services

Technology

Professional Services

Manufacturing

Consumer Goods

Telecommunications

Healthcare

Real Estate

Energy

E-commerce

Relevant Teams

Human Resources

Legal

Finance

Corporate Secretarial

Compensation & Benefits

Executive Leadership

Risk Management

Compliance

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Operating Officer

Senior Vice President

Vice President

Managing Director

Country Manager

Department Head

Senior Manager

Key Account Manager

Technical Lead

Senior Specialist

Industries
Law No. 40 of 2007 on Limited Liability Companies (Company Law): Provides the fundamental legal framework for corporate operations in Indonesia, including provisions on share capital, corporate governance, and shareholder rights
Law No. 13 of 2003 on Labor (Labor Law): Governs employment relationships and compensation structures in Indonesia, relevant for phantom stock plans as they are typically used as employee compensation
Law No. 7 of 1983 on Income Tax (as amended): Regulates taxation of various forms of income, including phantom stock payments which are typically treated as compensation income
OJK Regulation No. 32/POJK.04/2015: Regulations from Financial Services Authority (OJK) regarding share-based compensation plans and corporate capital structure
Bank Indonesia Regulations on Foreign Exchange Transactions: Relevant for phantom stock agreements involving foreign currency settlements or international participants
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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