Shadow Shares - Start-up Funding

Shadow stock has two different definitions. Most commonly it is used in reference to a synthetic class of stock of publicly traded companies. The “shadow stock” strips out the impact of broad market movements and allows holders to see returns based more closely on true corporate performance. In truth, not a lot of companies do this.

The second definition is older and is more in line with what your are looking for. Francine is right in her response, as it relates to your question. Synthetic equity compensation awards are usually issued as Stock Appreciation Rights or Phantom Stock, although cash-settled restricted stock units and partnership units are often used for the same purpose.