Phantom Equity: Lessons From The Antin Infrastructure Decision (Video)

Video Transcript

Meghan McKeever (00:06): Phantom equity can be a strategic way to compensate employees or contractors with something resembling stock, but without giving up stock in the company. But what happens when a company with phantom equity is sold? What should buyers and sellers watch out for? And how can they prevent misunderstandings that could sink the deal? I'm Meghan McKeever. I'm here with my partner Ellie Kang from Torys' New York office to answer these questions.

And in the process, we'll check in on a recent case from Delaware and then we'll help share some tips to help you avoid common pitfalls of phantom equity. So, Ellie, what is phantom equity?

Ellie Kang (00:41): Well, Meghan, like you said, it's an alternative way to compensate employees and also contractors and other types of service providers. It grants the recipients a right to future payments that tracks the value of the company's equity over time, either in full or in parts.