Document background
The Phantom Share Agreement is utilized when companies operating in Hong Kong wish to provide equity-like incentives to key employees while maintaining their existing shareholding structure. This document type is particularly relevant in situations where actual share issuance is impractical due to corporate structure, regulatory requirements, or shareholder preferences. The agreement establishes a synthetic equity arrangement that mirrors the economic benefits of share ownership, typically providing cash payments based on the company's value appreciation over time. It includes detailed provisions on grant terms, vesting conditions, valuation methodologies, and payment mechanisms, all structured in compliance with Hong Kong law. The Phantom Share Agreement is commonly used as part of broader compensation strategies for senior executives and key employees, offering them participation in the company's growth without the complexities of actual share ownership.
