Guide To Phantom Share Schemes

There are many different schemes and plans which can be used to incentivise employees. Some, such as the Enterprise Management Incentive ("EMI") scheme or Company Share Option Plan, are more tax efficient. Others, such as a nil-paid share scheme or unapproved options, are perhaps less so, but are not limited by as many legislative requirements –meaning that they can be tailored a great deal to suit the needs of the company.

However, one common theme with all of these forms of incentive is that they involve the issue, at some point or another, of shares by a company to its employee. Whilst the issue of shares to employees will often be commercially agreeable, there will be times when doing so is less appealing for the company and its shareholders. One way to solve this problem is through the use of a phantom share scheme.