Phantom stock is a contractual agreement between a corporation and recipients of phantom shares that bestow upon the grantee the right to a cash payment at a designated time or in association with a designated event in the future, which payment is to be in an amount tied to the market value of an equivalent number of shares of the corporation's stock. Thus, the amount of the payout will increase as the stock price rises, and decrease if the stock falls, but without the recipient (grantee) actually receiving any stock.
Phantom stock represents an agreement between a corporation and individuals who receive phantom shares, granting them the right to receive a cash payment at a specified time or upon a specific event, which amount is linked to the market value of equivalent shares. This arrangement enables recipients to profit from potential increases in the stock price without actually acquiring any shares.