Equity Compensation
Make Equity Compensation Part of a Coordinated Financial Plan
Equity compensation can create wealth, but it can also create concentration, liquidity, tax, and timing risks.
Foothills Investments helps professionals and executives evaluate equity-compensation decisions alongside investments, cash flow, retirement goals, and anticipated tax obligations.
Areas of planning
Restricted Stock Units
Nonqualified Stock Options
Incentive Stock Options
Coordinate vesting schedules, withholding, cash needs, diversification, and the role company stock should have in the overall portfolio.
Incentive Stock Options
Nonqualified Stock Options
Incentive Stock Options
Evaluate exercise timing, holding periods, liquidity, concentration, and potential alternative-minimum-tax considerations in coordination with the client’s tax professional.
Nonqualified Stock Options
Nonqualified Stock Options
Employee Stock Purchase Plans
Consider exercise timing, ordinary-income recognition, withholding, liquidity needs, and diversification.
Employee Stock Purchase Plans
Employee Stock Purchase Plans
Employee Stock Purchase Plans
Review contribution levels, purchase discounts, holding periods, concentration, and the interaction with other company equity.
Concentrated stock
Employee Stock Purchase Plans
Cash flow and estimated taxes
Develop a strategy for balancing company-specific risk with taxes, liquidity, goals, and restrictions.
Cash flow and estimated taxes
Employee Stock Purchase Plans
Cash flow and estimated taxes
Prepare for vesting, exercises, sales, withholding differences, and other anticipated tax obligations.
Process
- Inventory grants, vesting schedules, expiration dates, account statements, and plan documents.
- Identify upcoming decisions and liquidity needs.
- Evaluate alternatives in the context of the complete financial plan.
- Coordinate tax assumptions with the client’s CPA or tax professional.
- Develop an implementation and diversification schedule where appropriate.
Disclaimer
Foothills Investments does not guarantee the tax treatment of any equity-compensation transaction. Tax rules, plan terms, company restrictions, and individual circumstances vary. Clients should consult their tax and legal professionals before implementation.
Investing Is a Long-Term Journey
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Foothills Investments, L.L.C. is a Colorado-registered investment adviser. Registration does not imply a certain level of skill or training. Advisory services are offered only where Foothills Investments and its investment adviser representatives are appropriately registered or exempt from registration. Investing involves risk, including the possible loss of principal. Past performance does not guarantee future results.
Information on this website is provided for general informational and educational purposes and should not be considered individualized investment, tax, legal, accounting, or insurance advice.
Tax preparation and accounting services may be provided separately through Foothills Accountants, LLC, a commonly owned firm. Clients are not required to use Foothills Accountants and may select any tax or accounting professional. Separate services require separate written engagements and fees.