Phantom Stock Case Studies

I read an article recently that posed the question: Which is better? An ESOP or Phantom Stock.

Last time I blogged about the results you can achieve with premier talent vs. average talent. The surprising thing is how easily employers are satisfied with average talent even though premier talent is available. Perhaps employers think they can’t afford premier talent. I claim that premier talent is both available and affordable if you are prepared to commit to the following important improvements.

First, discover powerful ways to communicate a compelling future for your organization. Invest in building a business strategy that proves your company is capable of significant growth.

Early this week I presented a webinar titled “Is Your Company a Candidate for Phantom Stock.” If you’re interested, the link can be found here.

In preparation, I pondered the importance to a company of hiring premier talent. Ask yourself about the level of talent in your organization relative to the bell curve of all the talent available in the marketplace. Do your senior leaders fall into the median? Considering the shape of a normal bell curve, they probably do—unless, you’ve applied yourself to attracting the talent on the far right slope of the curve.

Have you studied the cost of turnover among executives? How do you measure that cost?

Last time I pointed out a few reasons that LTIPs can actually promote undesirable turnover. Today we’ll emphasize the elements of plan operation that really do encourage retention of premier talent.

First, reverse the errors I described last week, including: (a) do annual, not one-time grants; (b) allow for reasonable distributions without forcing employees to quit to get them; (c) avoid windfall payments, etc.

Does a long-term incentive plan (like phantom stock) improve employee retention? As with most questions like this, my answer: It depends.