The Phantom Stock Agreement is utilized in Indonesia when companies wish to provide equity-linked compensation without transferring actual ownership shares. This arrangement is particularly common in private companies, foreign-owned subsidiaries, and organizations seeking to align key personnel interests with company performance while maintaining existing shareholding structures. The document complies with Indonesian Company Law, Labor Law, and tax regulations, while providing detailed terms for phantom stock units, including grant conditions, vesting schedules, valuation methodologies, and payment procedures. It's especially relevant in contexts where actual share transfers are impractical due to regulatory restrictions, corporate structure limitations, or strategic considerations in the Indonesian market.
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1. Parties: Identification of the Company and the Participant entering into the phantom stock agreement
2. Background: Context of the agreement, including the Company's phantom stock plan and purpose
3. Definitions: Key terms including Phantom Stock Units, Vesting Period, Valuation Date, Base Value, and Payment Amount
4. Grant of Phantom Stock Units: Details of the phantom stock units being granted, including number and initial value
5. Vesting Schedule: Timing and conditions for vesting of phantom stock units
6. Valuation Mechanism: Method for calculating the value of phantom stock units
7. Payment Terms: Conditions and procedures for payment of vested phantom stock units
8. Termination Provisions: Rights and obligations upon termination of employment or service
9. Confidentiality: Obligations regarding confidential information
10. Taxation: Tax treatment and responsibilities
11. Governing Law and Dispute Resolution: Choice of law and dispute resolution procedures
12. General Provisions: Standard boilerplate clauses including amendments, notices, and entire agreement
1. Change of Control: Used when specific provisions are needed for corporate restructuring or ownership changes
2. Non-Competition and Non-Solicitation: Include when the company wants to restrict participant's competitive activities
3. International Provisions: Required when participants are located in multiple jurisdictions
4. Corporate Actions Adjustments: Include when specific provisions for stock splits, mergers, or other corporate actions are needed
5. Clawback Provisions: Used when the company wants right to recoup payments in certain circumstances
6. Administration: Include when detailed procedures for plan administration are needed
1. Schedule A - Grant Notice: Details of specific grant including number of units, base value, and vesting schedule
2. Schedule B - Vesting Schedule: Detailed timeline and conditions for vesting of phantom stock units
3. Schedule C - Valuation Formula: Detailed methodology for calculating phantom stock unit value
4. Appendix 1 - Consent Form: Participant's acknowledgment and acceptance of terms
5. Appendix 2 - Payment Election Form: Form for participant to elect payment timing and method
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