Compensation should instead be based on phantom stock values, calculated by an independent internal unit.

FORBES: Sarbox Says: Dodd-Frank Will Fail

Phantom stock values are less prone to manipulation, since the internal unit calculating them has access to all the inside information, which is unavailable to the market.

FORBES: Sarbox Says: Dodd-Frank Will Fail

Private tax practitioners, however, say a bigger problem is that the IRS simply hasn't gotten the message Congress sent--that it wants offer standards liberalized and special consideration given to taxpayers caught in unfair situations--such as employees taxed on phantom stock option profits or ordinary folk victimized by slick promoters.

FORBES: Let's Make a Deal

First, failing to deliver on short sales creates "phantom shares" and an artificially inflated supply of stock.

FORBES: Intelligent Investing Briefing Book

The ex-CEO of Comverse Technology arranged a secret slush fund of stock options by directing grants to "phantom" employees in a special account set up for the purpose, according to federal prosecutors.

FORBES: Magazine Article

It is the phantom shares that allegedly put excess downward pressure on a stock.

FORBES: Naked Shorting Case Gains Traction

It is looking at cash-based incentive schemes or phantom option plans, which tie the cash bonus to the stock's performance.

FORBES: Capitalism is contagious