Document background
The Phantom Unit Award Agreement serves as a crucial instrument for companies operating in India who wish to implement employee incentive programs without diluting actual equity. This document type is particularly valuable for private companies, subsidiaries of multinational corporations, and organizations with complex shareholding structures. The agreement outlines the grant of phantom units, which mirror the value of company shares but are settled in cash, making them an attractive alternative to traditional equity compensation. Under Indian law, these agreements must carefully navigate securities regulations, tax implications, and employment laws while providing clear terms for vesting, valuation, and settlement of the phantom units. The document is commonly used as part of broader employee retention and incentivization strategies, especially for key employees in senior or critical roles.
