Document background
The Phantom Equity Agreement is designed for Philippine companies seeking to provide equity-like incentives to key employees or consultants without altering their corporate structure or shareholding. This document becomes essential when companies want to attract and retain talent by offering long-term incentives, but face restrictions or complications in issuing actual equity, such as foreign ownership limitations, family business considerations, or complex corporate structures. The agreement must comply with Philippine labor laws, tax regulations, and corporate requirements while detailing the synthetic equity rights, including grant terms, vesting conditions, valuation methodologies, and payment triggers. It's particularly useful for subsidiaries of multinational companies, family-owned businesses, or companies preparing for future liquidity events.
