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Many executives are unsure of how and when to liquidate their stock compensation. Unfortunately, without a plan, many executives find themselves highly concentrated in company stock that can result in higher than average risk, and higher potential tax liability.

Through strategic stock compensation planning, we work with you to review the specific terms of your equity compensation and determine the optimal timing for selling stock compensation to reduce overall risk and tax liability.

Our stock compensation financial planners will:

  • Evaluate each type of your stock compensation both individually as well as collectively
  • Discuss your long and short-term goals to set up the most strategic financial plan
  • Help you understand your risks
  • Consider how your stock options will apply to your retirement planning
  • Determine how your stock compensation will affect your taxes
  • Help you understand how your stock options would be affected if you leave the company or retire.

For many executives, stock compensation is a large part of their overall compensation. But stock compensation can be complicated because it comes in various forms, including:

  • Restricted Stock Units (RSUs) – A Restricted Stock Unit (RSU) is a compensation issued by an employer to an employee in the form of company stock. Restricted stock units are issued to an employee through a vesting plan and distribution schedule after achieving required performance milestones or upon remaining with their employer for a particular length of time. RSUs give an employee interest in company stock but have no tangible value until vesting is complete. The restricted stock units are assigned a fair market value when they vest. Upon vesting, they are considered income, and a portion of the shares is withheld to pay income taxes. The employee receives the remaining shares and can sell them at his or her discretion.
  • Incentive Stock Options (ISO) – An Incentive Stock Option (ISO) is a type of employee stock option with a tax benefit that, when exercised, it isn't necessary to pay ordinary income tax. Instead, the options are taxed at a capital gains rate.
  • Employee Stock Options (ESO) – An Employee Stock Option grants specified employees of a company the right to buy a certain amount of company shares at a predetermined price for a specific period. Employees typically must wait for a specified vesting period to pass before they can exercise the option and buy the company stock because the idea behind stock options is to align incentives between the employees and shareholders of a company.
  • Employee Stock Purchase Plans (ESPP) – An plan (ESPP) is a company-run program in which participating employees can purchase company shares at a discounted price. Employees contribute to the plan through payroll deductions, which build up between the offering date and the purchase date. At the purchase date, the company uses the accumulated funds to purchase shares in the company on behalf of the participating employees.
  • Performance Shares – Performance Shares are shares of company stock given to managers and executives only if certain company-wide performance criteria are met, such as earnings per share targets.
  • Stock Appreciation Rights (SAR) – A Stock Appreciation Right (SAR) is a bonus given to employees that is equal to the appreciation of company stock over an established time period. Similar to employee stock options (ESO), SARs are beneficial to the employee when company stock prices rise; the difference with SARs is that employees do not have to pay the exercise price, but receive the sum of the increase in stock or cash. The primary benefit that comes with SARs is the fact that the employee can receive proceeds from stock price increases without being required to buy anything.