About the Course
Introduction
This CLE webinar will provide executive compensation counsel guidance on the use of private company phantom plans to incentivize and retain current service providers. The panel will outline the mechanics of these compensatory arrangements, discuss strategic considerations and how to reconcile the competing interests of senior management and equityholders, and highlight the tax implications counsel must be aware of when structuring phantom plans.
Description
Private company phantom incentive plans—also referred to as management incentive carve-out plans or phantom bonus plans—are a type of instrument used to incentivize current employees by committing to make a payout on a later date or a change in control. Unlike typical equity instruments, which may be settled in shares that may vote and may (under some circumstances) be subject to taxation at capital gains rates, phantom plans are compensatory contracts that allow service providers to share in the value they build in a company.
Structuring these arrangements raises many strategic questions. Should the phantom plan track company equity value or another metric? Should the awards be reduced for other payouts or participants in any escrow or earnout? Should people be forced to be present at the change in control in order to receive a payout? Should the awards be forfeited under certain conditions? What should happen to the forfeited amounts? How can the plan be amended?
A phantom incentive plan may create tense negotiations of competing interests to encourage retention for senior management and maximize value for shareholders. This presentation will highlight the considerations that affect plan design and discuss common trends.
To further complicate matters, phantom plans are subject to a unique and complicated set of tax rules. This discussion will highlight common constraints on phantom plans in the U.S. tax regime, including Section 409A (regulating deferred compensation arrangements) and 280G (regulating golden parachute payments).
Listen as our experienced panel discusses the use of private company phantom plans to incentivize and retain current service providers. The panel will outline the mechanics of these plans, discuss strategic considerations and how to reconcile the competing interests of senior management and equityholders, and highlight the tax implications counsel must be aware of when structuring phantom plans.
Presented By
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Ms. Magas advises public and private companies, private equity firms, private investment funds and compensation committees on the executive compensation and benefits aspects of a variety of major corporate transactions, including mergers and acquisitions, reorganizations and financings. Her practice spans a broad range of employee-related matters that involve various industries, and she regularly counsels on day-to-day matters such as compensation program design and implementation; tax considerations related to nonqualified deferred compensation arrangements, deductibility of executive compensation and golden parachutes; securities reporting, registration and disclosure compliance; and corporate governance issues. In addition, Ms. Magas has extensive experience in designing and implementing compensation arrangements for partnerships and limited liability companies, including asset managers, as well as representing individual executives and management teams in matters related to employment, equity and separation agreements. In recognition of her work, Ms. Magas has been repeatedly named one of Best Lawyers’ Ones To Watch in America.
Mr. Wiseman counsels companies, boards of directors, independent and compensation committees, executive management teams and members of management on executive compensation matters that arise in the ordinary course of business and with respect to extraordinary events, including leadership transitions. He also regularly provides tax planning advice with respect to Internal Revenue Code Sections 409A and 162(m), as well as the excise tax on “golden parachute” payments under Sections 280G and 4999 and related sections. In addition, Mr. Wiseman assists clients with the design and implementation of equity- and cash-based incentive plans and awards, profit and capital interest participation in partnership and LLC arrangements, and executive and nonexecutive employment, severance, retention and change-in-control programs and agreements. He also frequently advises clients regarding SEC rules governing compensation- and benefits-related disclosures, equity-related registration requirements, and exemptions and compliance with related rules under NYSE and Nasdaq listing standards.
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
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CPE credit is not available on recordings.
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BARBRI is a NASBA CPE sponsor and this 90-minute webinar is accredited for 1.5 CPE credits.
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BARBRI is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).
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Date + Time
- event
Thursday, October 22, 2026
- schedule
1:00 PM ET/10:00 AM PT
I. What is a phantom plan?
II. Why do private companies adopt phantom plans?
III. Plan and award mechanics
A. Form of award
B. Adoption/implementation of plan
C. Grant and vesting mechanics
D. Payments mechanics
IV. Tax issues
A. Tax treatment of awards
B. Implications of IRC Section 409A
C. IRC Section 280G
The panel will review these and other key issues:
- Phantom plan alternatives, including phantom units tied to share value versus percentage of transaction proceeds
- Structuring considerations related to IRC Section 409A
- Implications of, and options for cleansing golden parachutes, IRC Section 280G
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