Increasingly, employers are considering alternative compensation structures to attract, motivate, retain, and reward key employees. Two of the primary alternatives take the form of equity-based incentive compensation — specifically phantom equity and equity appreciation rights. These arrangements are attractive because they encourage employees to think like an owner without issuing actual equity, offer significant design flexibility, and typically involve no upfront cost to the employee. In an article for Nebraska CPA Magazine, Pete Langdon provides a general overview of phantom equity and equity appreciation rights, along with key design considerations when structuring these arrangements.

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