Category: business

As Wikipedia calls it, Phantom stock is a contractual agreement between a corporation and recipients of phantom shares that bestow upon the grantee the right to a cash payment at a designated time or in association with a designated event in the future, which payment is to be in an amount tied to the market value of an equivalent number of shares of the corporation’s stock.

In layman terms, its a percentage of proceeds or dividends if the company gets sold. But why offer or take Phantom Equity?

Phantom Equity are offered by Business Owners when they hire a CEO. This is most often similar to Royalty. When a company is already making millions of dollars in revenue, it makes more sense for a business owner to offer phantom equity than equity unless they believe they’ll sell the company in future. If you’re a CEO, and when you take phantom stocks, you don’t actually own the business but you do get many perks that comes out of the equity.

Being a CEO is a demanding job and very stressful, they are many times part of a Bad Dad’s club. If somebody doesn’t understand phantom equity, it is actually a negative incentive.

The pandemic, despite all the horrors it has brought, has provided some people with more time for self-reflection, majorly people in Business.

Game theory is a mathematical context but very relevant to change the game of business. Von Neumann and Morgenstern published Theory of Games and Economic Behavior, and provided a systematic way of understanding the behavior of players in the game. Business is always a high-stakes game. In Business, you have to look forward far into the game and then reason backward to figure out which of today’s actions will lead you to where you want to end up. The primary insight of game theory is to focus on others i.e., Allocentrism.

So what are the elements of the game? In game theory, there are two kinds of solutions – Pure Strategy Solution and Mixed Strategy Solution and five elements shortly called as PARTS: players, added values, rules, tactics, and scope. These five elements describe all available solutions. To change the game in your favor, you have to change one or more of these elements. Sometimes the best way to succeed is to let others, including your competitors, do well. The most valuable service you can offer is creating competition, so don’t ever give away anything for free. You can profit by using insights from game theory.