Concentrated Wealth at Work
An Executive VP with a publicly traded company, our client had accumulated a large position in company stock, including restricted shares and a sizable "in-the-money" stock option. He planned to retire at age 60 but had significant expenses in the meantime, including paying for his daughter's wedding and two remaining years of college tuition for his son.
The client was approached by an executive recruiter with a potential opportunity in Senior Management at a competitive firm. He was interested in clarifying the true value of his equity compensation program so that he understood what he would be giving up should he decide to leave, and what was needed to compensate for the lost value of unvested stock.
Having experienced unpleasant tax surprises related to stock based compensation, there was concern about making a mistake when it came time to exercise. Lacking coordination and communication with his existing accountant, he was considering hiring a new CPA in the hopes of taking a more proactive and collaborative approach to maximize tax efficiency.
We helped this executive client recognize the risk of a heavy position in company stock and assisted in executing a tax-efficient solution. We also helped him understand the forfeit value of his non-qualified stock options, allowing for a more informed career decision.
The client would leave a considerable amount on the table should he leave the company.
Approximately 45 percent of his investment net worth was tied up in company shares.
A tax-efficient divestiture and diversification strategy was recommended and implemented over the next five years.
College costs and wedding expenses were fully funded using after-tax option proceeds, and a diversified portfolio was constructed to fund supplemental retirement expenses.
Today, this valued client has a professional team in place to help navigate the complexities surrounding his employer stock programs. With a real-time view of the complete financial picture, he is clear and confident about where he stands and well-equipped for the decisions that lie ahead.
Actual performance and results will vary. These case studies do not constitute a recommendation as to the suitability of any investment for any person or persons having circumstances similar to those portrayed, and a financial advisor should be consulted regarding your specific situation.