Equity Compensation
Equity compensation comes in various forms, including stock options, restricted stock units (RSUs), and employee stock purchase plans (ESPPs). Developing an investment strategy around these assets is crucial to optimizing your financial well-being. A well-thought-out strategy can help individuals maximize tax benefits, diversify their investment portfolio, and reduce the risk associated with having a significant portion of their wealth tied to a single company's performance, ultimately ensuring long-term financial security and flexibility.
Our friends at EquityFTW provide a comprehensive overview of the various types of equity compensation from RSUs to Stock Options and everything in between.
We work with clients across a range of industries and functions to develop a holistic plan to meet their needs.
Forms of Stock Compensation
Restricted Stock Units
RSUs (Restricted Stock Units) are a form of employee equity compensation where employees receive a specific number of company shares at a predetermined future date, typically after meeting vesting conditions.
Non-Qualified Options
Employee Stock Options are a form of employee compensation that grant the right to purchase company shares at a specified price, typically at or above the current market price, during a predetermined period.
Incentive Stock Options
Incentive Stock Options afford employees the opportunity to purchase stock at a steep discount. ISOs offer potential tax advantages when exercised, provided certain criteria and holding periods are met, allowing employees to potentially pay lower capital gains tax rates instead of ordinary income tax rates on their profits.
Employee Stock Purchase Plans
An Employee Stock Purchase Plan (ESPP) is a company-sponsored program that enables employees to purchase company stock at a discounted price through payroll deductions, fostering employee ownership and investment in the company.