> Shadow Equity (sometimes called Phantom Stock) isn’t real stock. It’s basically just an IOU that’s worth the same dollar value as the actual stock. The creators will get paid 50% of the proceeds in the event the company sells, but legally they don’t actually own any of the company.
To my untrained eye, this just seems like owning stock without voting privileges, which seems okay? Is the fear that the voters will eventually just change the creator profit sharing to zero and milk the company dry rather than selling it?
Shadow Equity usually doesn't pay dividends. So if the stock devalues due to payed out dividends (and the shadow stock has no voting power), it's the creators paying out the investors from their share.
To my untrained eye, this just seems like owning stock without voting privileges, which seems okay? Is the fear that the voters will eventually just change the creator profit sharing to zero and milk the company dry rather than selling it?