Advocaten / Avocats / Lawyers

Home>News>Covid-19>Considering the COVID-19 pandemic, is it interesting to introduce a stock option scheme within my (management) company now?

Thursday, 07 May 2020

Considering the COVID-19 pandemic, is it interesting to introduce a stock option scheme within my (management) company now?

The gain which could result from stock option schemes depends on several factors such as the company’s growth expectations, market trends, geopolitical events, …

Due to the COVID-19 pandemic, many public as well as private companies are faced with a (substantial) decrease of their share value.

Therefore, it could be interesting to introduce a stock option scheme now, before the stock market revives. Indeed, such stock options not only provide the beneficiaries the opportunity to profit from the lower exercise price compared to the issuance of a stock option scheme under “normal” conditions. It also provides an incentive mechanism, which could result in a faster recovery of the company.

However, the option value is expected to move in the opposite direction of the stock value in current circumstances. Volatility of the underlying stock is one of the key inputs to determine the fair value of an option next to the exercise and current price of the underlying stock as well as the life of the option. Due to an increase of (expected) volatility, the option value increases as well.

Hence, although the option cost might increase due to an increase in volatility, current market conditions provide an opportunity to establish a stock option scheme as stock value decreased significantly.

Contact one of the authors of this article for more information or assistance in connection herewith.

Daan Buylaert - Partner (

Sarah De Wilde - Senior Associate (

Kenny Van Tulder - Senior Manager (

Laurine Vanherck - Associate (

Tiberghien Brussels

Tour & Taxis

Havenlaan|Avenue du Port 86C B.419
BE-1000 Brussels

T +32 2 773 40 00

F +32 2 773 40 55

Tiberghien Antwerp

Grotesteenweg 214 B.4
BE-2600 Antwerp

T +32 3 443 20 00

F +32 3 443 20 20

Tiberghien Ghent

Esplanade Oscar Van de Voorde 1
BE-9000 Gent

T +32 9 216 18 00

Tiberghien Hasselt

Torenplein 7 B13.1
BE-3500 Hasselt

T +32 11 57 00 13

Tiberghien Luxembourg

23, Boulevard Joseph II
LU-1840 Luxembourg

T +352 27 47 51 11

F +352 28 66 96 58