What to Do With Equity Compensation

As compensation becomes more complex, the goal is to understand what you own, what may vest, what could be taxable and how much of your future depends on one employer.

Know what you actually have

RSUs, nonqualified options, incentive stock options and employee stock purchase plans are not interchangeable. Review grant agreements, vesting schedules and expiration dates before making assumptions about value or taxes.

Plan around vesting events

Vesting can increase taxable income and company-stock exposure. Build a calendar of expected events so tax estimates, cash needs and diversification decisions are considered before deadlines.

Avoid treating stock as separate from your portfolio

Employer shares belong in the same risk conversation as retirement accounts and brokerage assets. Your job itself may also represent economic exposure to the employer.

Connect the stock to a purpose

Decisions become clearer when equity is connected to goals: a home down payment, financial independence, education funding or long-term investing. A goal-based framework can reduce the temptation to make decisions solely on recent stock-price movements.

Get specialized advice when needed

Tax consequences and securities restrictions can be complex. Use company plan materials and coordinate with qualified tax or legal professionals when an exercise, sale or trading plan raises specialized issues.