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Background Note
| HBS Case Collection
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2000
Note on Employee Stock Ownership Plans (ESOPs) and Phantom Stock Plans
by
Dwight B. Crane and Indra Reinbergs
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Abstract
Provides a brief overview of employee stock ownership plans (ESOPs) and phantom stock plans for owners of closely held companies. ESOPs can be used as a tool of corporate financing, and can provide employees with ownership interests. Phantom stock plans can reward executives for value creation without giving up ownership. Covers typical company motives for establishing such plans, regulation, tax advantages, administrative costs, issues of corporate governance, and payment of plan benefit. Includes a two-page bibliography with references to further sources of legal and tax information.
Keywords: Financing and Loans;
Employee Stock Ownership Plan;
Motivation and Incentives;
Management Teams;
Corporate Governance;
Ownership Stake;
Taxation;