Financial Planning for Stock Options (IPO)
“How can you derive the greatest value from your stock-based compensation to boost your net worth and improve your financial future? Understanding your company program and your options is key.”
One of the most common forms of life-changing sudden wealth is through stock options. If you work for a tech company or startup, you’ve likely been offered employee stock options as an employment incentive. If you are accepting employee stock options as part of your compensation package, it’s critical that you understand what they are and how you might exercise or sell them in the future. The tax and legal issues around stock options can be complex. A client’s stock options can represent 80% to 90% of their net worth, but if they are unvested or unexercised, extracting this value takes a great deal of planning. We have a team of professionals who have been helping clients get the most value when their company goes public through an IPO or SPAC.
Among other considerations, you’ll want to evaluate when you should exercise stock options, the tax impact of awards, how to determine and track the cost basis of stock, and whether and when to sell company shares. You’ll also want to understand big-picture concerns, such as how your stock-based compensation and other employer benefits will impact your financial future, including your retirement and estate planning.
We help companies, founders, corporate executives, and others with stock-based compensation learn more about their employee stock option choices and properly plan around them, leveraging opportunities to reduce the associated tax consequences. For employee groups, we also offer education tailored to your company’s specific stock plan and one-on-one planning to help executives navigate the tax complexities unique to their personal situation.
Even if you’re already familiar with stock-based compensation and its tax implications, contact a trusted advisor for help identifying new opportunities, weighing possible tax scenarios, and fitting your stock-based compensation planning into your larger financial goals.