A growth participation plan, whether it's a Phantom Share Plan or a Share Option Plan, is an exciting part of your employment journey. Here's what to expect from grant to payout.
Author:
Robert Capla
Your journey begins when you become eligible to participate in a Growth Participation Plan. This usually happens in one of two ways:
After receiving your grant, there's usually a waiting period called 'vesting'. During this time, you're earning the right to the full financial benefit of your phantom shares or stock options. If you leave the company before the end of the vesting period, you may lose some or all of these rights, depending on your company's policies.
As time goes by and you remain with the company, your phantom shares or stock options could potentially increase in value. This is where you get to share in the company's growth.
If you have Stock Options, there will come a time when you can decide to 'exercise' these options. This means you can buy the company's shares at the price set when you were granted the options (the exercise price). If the company's share price has increased, you can buy shares at a discount and could make a profit if you then sell the shares.
If you have Phantom Shares, you don't need to decide about exercising. Instead, there will be a predetermined point when your phantom shares are 'cashed in' and you receive a payout reflecting the growth in the company's value since you were granted the phantom shares.
When you leave the company, you might still have unexercised stock options or un-cashed phantom shares. What happens to these can vary based on your company's policies, so it's always important to understand your company's policies around leaving or retirement.
Sometimes, special events such as a sale of the company or a public stock offering can impact your phantom shares or stock options. These events often trigger a payout or require decisions about exercising your options. Your company will provide information and guidance if such an event occurs.
This is a simplified overview of your journey with growth participation plans. The specifics can vary, so always refer to your plan documents or talk to HR for details.