What is a synthetic equity plan?

Synthetic equity plans can be an attractive alternative to stock options as they mimic the economic value of equity without buying or selling actual stock. Synthetic equity is often used to recruit, retain and reward top talent by providing a ownership level benefit without giving up any actual ownership of the company. In this video, Principal John Gagnon, answers the question “What is a synthetic equity plan?” and discusses a case example and why some companies may prefer this type of equity alternative over a more traditional stock option.