{"id":1197,"date":"2026-04-28T10:39:34","date_gmt":"2026-04-28T08:39:34","guid":{"rendered":"https:\/\/dialog-unlocked.ch\/phantom-options-in-sme-and-start-ups-practice-considerations\/"},"modified":"2026-04-28T10:39:35","modified_gmt":"2026-04-28T08:39:35","slug":"phantom-options-in-sme-and-start-ups-practice-considerations-2","status":"publish","type":"post","link":"https:\/\/dialog-unlocked.ch\/en\/phantom-options-in-sme-and-start-ups-practice-considerations-2\/","title":{"rendered":"Phantom Options in SME and start-ups: Practice considerations"},"content":{"rendered":"<div class=\"fusion-fullwidth fullwidth-box fusion-builder-row-1 fusion-flex-container nonhundred-percent-fullwidth non-hundred-percent-height-scrolling\" style=\"--awb-border-radius-top-left:0px;--awb-border-radius-top-right:0px;--awb-border-radius-bottom-right:0px;--awb-border-radius-bottom-left:0px;--awb-padding-bottom:33px;--awb-flex-wrap:wrap;\" ><div class=\"fusion-builder-row fusion-row fusion-flex-align-items-flex-start fusion-flex-content-wrap\" style=\"max-width:1248px;margin-left: calc(-4% \/ 2 );margin-right: calc(-4% \/ 2 );\"><div class=\"fusion-layout-column fusion_builder_column fusion-builder-column-0 fusion_builder_column_1_1 1_1 fusion-flex-column\" style=\"--awb-bg-blend:overlay;--awb-bg-size:cover;--awb-width-large:100%;--awb-margin-top-large:0px;--awb-spacing-right-large:1.92%;--awb-margin-bottom-large:0px;--awb-spacing-left-large:1.92%;--awb-width-medium:100%;--awb-spacing-right-medium:1.92%;--awb-spacing-left-medium:1.92%;--awb-width-small:100%;--awb-spacing-right-small:1.92%;--awb-spacing-left-small:1.92%;\"><div class=\"fusion-column-wrapper fusion-flex-justify-content-flex-start fusion-content-layout-column\"><div class=\"fusion-text fusion-text-1\"><p>We have recently seen increasing client demand for \u201cphantom options\u201d, especially in SME (small and mid-sized entities) and start-ups. Please find below a few selected relevant practice considerations in this respect.<\/p>\n<p><strong>What are Phantom Options?<\/strong> No real equity, no assets, but merely contractual, personal, conditional rights, reflecting the economic effects of \u201creal\u201d employee stock options, thus with a cash-payment upon exercise. Slightly simplified: Each phantom option entitles the holder to receive cash payment in the amount of the value increase of a real share over a certain period of time, subject to ongoing employment.<\/p>\n<p><strong>What is the incentive focus?<\/strong> Clearly, the conceptual focus is on retention (forfeiture upon termination of employment) and on value creation (measurement of value increase in a real share). Therefore, phantom options might be an interesting type of incentive plan especially for growth businesses, i.e., start-ups or other companies with a strong growth strategy, seeking for simple and transparent incentive plans without the need to issue real equity.<\/p>\n<p><strong>What are the challenges in practice?<\/strong><\/p>\n<ul>\n<li>No payout without value creation in the company; therefore, indeed only suitable for growth strategies.<\/li>\n<li>Conceptional question: Pay-out only upon a company exit event, or also in the absence of an exit, e.g. during certain pre-determined time windows? This needs to be aligned with the overall strategy.<\/li>\n<li>If a (partial) pay-out should be possible also in the absence of an exit: Need to define and measure company value increase. No need to run sophisticated market valuations; a simplified, transparent, appropriate valuation formula might be sufficient suitable.<\/li>\n<li>Communication and complexity: Employees need to understand the mechanisms of the incentive plan, of how the underlying value increase will be measured and how this translates into a potential pay-out per option. This also means (especially where a pay-out might be possible in the absence of an exit): The relevant financials and factors for the underlying valuation need to be communicated to plan participants (subject to confidentiality clauses, of course).<\/li>\n<li>Liquidity and cash planning: Future pay-outs need to be taken into account in due course.<\/li>\n<\/ul>\n<p><strong>What is the tax and accounting treatment?<\/strong> In a nutshell: Like a normal cash bonus, but over several years and dependent on the company value development.<\/p>\n<p>An important distinction remains to be noted: Phantom Options are not the same as Phantom Shares. While Phantom Shares pay out the entire value of a share, Phantom Options only pay out the value increase as of a certain starting point. The two instruments, therefore, provide for a different type of incentivization, supporting a different set of aims and strategies.<\/p>\n<p>In case of any question, or for further support in this respect, please <a href=\"mailto:info@dialog-unlocked.ch\">contact us<\/a>.<\/p>\n<\/div><\/div><\/div><\/div><\/div>\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":4,"featured_media":1203,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[23],"tags":[],"class_list":["post-1197","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-unkategorisiert-2"],"_links":{"self":[{"href":"https:\/\/dialog-unlocked.ch\/en\/wp-json\/wp\/v2\/posts\/1197","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dialog-unlocked.ch\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dialog-unlocked.ch\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dialog-unlocked.ch\/en\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/dialog-unlocked.ch\/en\/wp-json\/wp\/v2\/comments?post=1197"}],"version-history":[{"count":2,"href":"https:\/\/dialog-unlocked.ch\/en\/wp-json\/wp\/v2\/posts\/1197\/revisions"}],"predecessor-version":[{"id":1199,"href":"https:\/\/dialog-unlocked.ch\/en\/wp-json\/wp\/v2\/posts\/1197\/revisions\/1199"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dialog-unlocked.ch\/en\/wp-json\/wp\/v2\/media\/1203"}],"wp:attachment":[{"href":"https:\/\/dialog-unlocked.ch\/en\/wp-json\/wp\/v2\/media?parent=1197"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dialog-unlocked.ch\/en\/wp-json\/wp\/v2\/categories?post=1197"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dialog-unlocked.ch\/en\/wp-json\/wp\/v2\/tags?post=1197"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}