Executives with companies that grant equity compensation are often too focused on making their companies successful and do not have the time to become experts on how to best manage that portion of their portfolio. Therefore, it tends to get ignored and not treated as the potentially critical component of their financial plan that it is.
Why Equity Compensation Planning is Important
Individuals with equity compensation face unique planning opportunities. Tax, liquidity, and diversification issues, along with special reporting requirements often accompany Restricted Stock Units, Incentive Stock Options, Non-Qualified Stock Options, other forms of equity compensation and potential 83(b), and 83(i) elections.
Integrated Capital Planning advises on the ramification of liquid and illiquid options and holdings, and monitors clients equity compensation, while incorporating tax and liquidity planning into ongoing financial planning client’s service.
What We Can Do For You
Our Equity Compensation Planning service includes:
- Helping you decide when the timing of option exercises: Timing can have a substantial effect on the taxation of option exercises and the ability to do so efficiently.
- Creating a Rule 10(b)(5)-1 plan: Insiders can be faced with many restrictions as to when they can take action with their company holdings. If done properly, a Rule 10(b)(5)-1 plan can help mitigate those restrictions.
- Pre-IPO liquidation strategies: Planning before a company goes public can have a tremendous positive possible impact for those holding equity in the pre-ipo company.
- Alternative Minimum Tax planning: Being aware of potential tax pitfalls relating to certain types of options is critically important.
- Diversification strategies: Without a well-thought-out diversification strategy, having what we call the three legs of concentration can be extremely risky. Those three legs of concentration are your livelihood, potentially your retirement plan if it holds company equity, as well as the company stock and options held directly. Any negative issues that the company faces can have devastating financial consequences if someone finds themselves in these concentrated positions.