Executive compensation is complex. How can you be sure you’re making the right financial moves?  

 If you’ve been juggling your work life, family life, and financial life, you’re not alone. 

Cognitive dissonance can be both ironically humorous and deeply unsettling depending on how long you think about it. 

As a corporate executive, you help drive the organization’s growth and profitability. At home, however, managing your own wealth feels like a chore at best – an afterthought at worst. 

Do you really understand how your executive compensation works? Do you know how to maximize its value and minimize its risks? Do you have a plan to align your compensation with your personal and professional goals? 

Answering no to any of those questions may cause some not-so-subtle anxiety for someone with your expertise, experience, and drive – but you are not alone.  

Many corporate executives are so focused on their work that they neglect their own financial planning. More-than-full days at the office are followed by equally demanding nights and weekends on the home front with your family.   

You’re not complaining. You just don’t have much time for making sense of your increasingly sophisticated compensation package – much less planning and implementing strategies for what to do with it. And you know this isn’t sustainable. Leaving a little on the table today can have a compounding impact that hurts you and your family down the road.  

The upside of your options 

It is becoming commonplace for professionals to be incentivized with equity compensation, such as stock, grants, options, or the right to purchase stock of the employer. This empowers an employee to participate in the potential upside and growth of the business while incentivizing long-term loyalty from the company’s most essential talent – making it the most valuable and strategic component of your compensation package.  

You can maximize your long-term incentives by understanding how they work, how they are valued, and how they are taxed. You can also leverage your long-term incentives by exercising your stock options, vesting your restricted stock units, earning your performance shares, or receiving your cash. 

The downside of your options 

Long-term incentives are also the most complex, variable, and regulated component of your compensation package.  

Your options may be subject to various rules, such as vesting schedules, holding periods, blackout periods, clawbacks, and more. It’s all too easy to miss out on opportunities to optimize your tax situation, diversify your portfolio, increase your liquidity, and protect your wealth if you misunderstand the nuances and corresponding actions to take.  

You also must mitigate the inherent risks that come with this territory, such as market volatility, company performance, and regulatory changes. 

Taking command of your options 

There’s a lot to take in here. These waters are deep, and we’ve only dipped in our toes. 

This blog post is just the intro to a series of content designed to guide you through the process of understanding and optimizing your equity compensation and stock options. 

Here’s the road map for traversing this complex territory: 

  • Diversifying your wealth when your compensation includes equity in a single company. 
  • Mitigating market volatility when your compensation shifts from salary to stocks
  • Navigating the tax implications of equity compensation and stock options. 
  • Addressing liquidity when your compensation comes through equity. 
  • Integrating stock options into your dream retirement. 

Remember, you don’t have to do this alone. Whether you’re feeling inspired or overwhelmed – or both – about taking command of your compensation, let’s talk. 

© 2024 Advisory services offered by Moneta Group Investment Advisors, LLC, (“MGIA”) an investment adviser registered with the Securities and Exchange Commission (“SEC”). MGIA is a wholly owned subsidiary of Moneta Group, LLC. Registration as an investment adviser does not imply a certain level of skill or training. The information contained herein is for informational purposes only, is not intended to be comprehensive or exclusive, and is based on materials deemed reliable, but the accuracy of which has not been verified. 

Trademarks and copyrights of materials referenced herein are the property of their respective owners. Index returns reflect total return, assuming reinvestment of dividends and interest. The returns do not reflect the effect of taxes and/or fees that an investor would incur. Examples contained herein are for illustrative purposes only based on generic assumptions. Given the dynamic nature of the subject matter and the environment in which this communication was written, the information contained herein is subject to change. This is not an offer to sell or buy securities, nor does it represent any specific recommendation. You should consult with an appropriately credentialed professional before making any financial, investment, tax or legal decision. An index is an unmanaged portfolio of specified securities and does not reflect any initial or ongoing expenses nor can it be invested in directly. Past performance is not indicative of future returns. All investments are subject to a risk of loss. Diversification and strategic asset allocation do not assure profit or protect against loss in declining markets. These materials do not take into consideration your personal circumstances, financial or otherwise. 

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