Phantom Equity Plan for LLC

[Guest aaronk]

LLC wants to give CEO phantom equity of 5% such that on 12/31 of each year the company would pay CEO a bonus equal to 5% of the total cash distributions made to actual equity members during the calendar year. Presumably the employee must be employed through the end of each year so I believe the payments are always subject to a SROF and therefore we could always qualify for the STD exception if we pay out within 60 days. Do you see anything that could cause a 409A problem?

Thanks.