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The Phantom Stock Award Agreement serves as a crucial instrument for companies operating in the Philippines who wish to offer employees the economic benefits of stock ownership without transferring actual equity. This arrangement is particularly valuable for private companies, family-owned businesses, or subsidiaries of multinational corporations where actual share transfers may be impractical or undesirable. The agreement must comply with Philippine securities regulations, labor laws, and tax requirements while detailing the phantom stock program's structure, including grant terms, vesting conditions, valuation methodologies, and payment procedures. It's commonly used as part of a comprehensive compensation strategy to attract, retain, and motivate key employees by aligning their interests with the company's financial performance, while maintaining existing ownership structures.

1. Parties: Identification of the Company and the Award Recipient, including their complete legal names and addresses

2. Background: Context of the phantom stock award program and its purpose within the Company's compensation strategy

3. Definitions: Key terms including 'Phantom Stock Unit', 'Fair Market Value', 'Vesting Date', 'Payment Date', and other program-specific terminology

4. Grant of Phantom Stock Units: Details of the award, including number of units granted and grant date

5. Vesting Schedule: Specific conditions and timeline for vesting of the phantom stock units

6. Valuation Methodology: Process and formula for determining the value of phantom stock units

7. Payment Terms: Timing and method of payment for vested phantom stock units

8. Termination Provisions: Treatment of phantom stock units upon various types of employment termination

9. Confidentiality: Obligations regarding non-disclosure of agreement terms and company information

10. Tax Provisions: Tax implications and responsibilities for both parties under Philippine law

11. Amendment and Administration: Company's rights to modify the program and administrative procedures

12. Governing Law and Jurisdiction: Specification of Philippine law as governing law and jurisdiction for disputes

13. General Provisions: Standard contractual provisions including notices, entire agreement, and severability