Ask the CFP: How Do I Maximize My Compensation Plan?

Hello, everyone, and welcome to this month’s “Ask The CFP” segment.  This month’s question is, “What is the best way to maximize my executive compensation package?”

This is certainly complex and often requires individualized answers, but here are some areas to consider.  There is no shortage of ways to compensate executives, from a wide range of equity awards to deferred compensations plans.

While we see most executives are proud to work for their organization and are confident in the future, it can also lead to a lack of diversification across your nest egg. Determining how much wealth should be in your employer stock versus other assets can be a difficult task. This can become increasingly tricky when more and more of your compensation comes in the way of equity incentives. It’s important to develop a plan that allows you to diversify your assets and protect your financial goals.

It’s common to receive your equity compensation in several different ways, whether it be Stock Options, Restricted Stock Units, Performance Shares or even an Employee Stock Purchase Plan. Each type of equity compensation has tax nuances that must be considered. Some of the important considerations are determining when you pay the taxes and when you receive the proceeds. There are times where you could be required to pay the taxes prior to receiving the proceeds. If this is not accounted for in your planning, there is a potential for a surprise come tax time.

As your compensation package becomes more robust, so does the number of deadlines and dates. Tracking this important information becomes more important when it comes to maximizing your compensation. For example, some benefits may only be available to elect once a year; if you fail to make an election, you could miss out on an entire year of benefits. Many times, electing your deferred compensation plan can only be done once a year; if you miss the deadline, you could miss out on a significant tax savings. It’s important to add these dates to your calendar to ensure you don’t miss an important deadline.

If managing all of this seems a bit overwhelming, choose a financial planner that specializes in these matters. The right professional can help you develop a plan that works for your family to make sure you can maximize your compensation plan.

If you have questions for next month’s video, please send them to Thank you for watching and we will see you next month.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Please speak with a qualified tax or legal professional before making any changes to your personal situation.

© 2020 Moneta Group Investment Advisors, LLC. All rights reserved. These materials were prepared for informational purposes only based on materials deemed reliable, but the accuracy of which has not been verified. You should consult with an appropriately credentialed professional before making any financial, investment, tax or legal decision. Past performance is not indicative of future returns. These materials do not take into consideration your personal circumstances, financial or otherwise.

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