Equity Compensation Management

Evaluating the potential value of an equity package is a critical part of accepting or negotiating a job offer. There are actions you can take now that will significantly affect your finances during a job transfer, IPO, or any other equity event.

What you need to do

Key steps to consider, what to watch out for, and ways advisors can ensure you take the right steps both now and in later years.

  • Collect Full Information

    Find out the full number of shares outstanding, any upcoming dilution of shares (funding rounds, new board members), and your own history with equity at other companies.

  • File Tax Forms

    Depending on the type of equity and what’s allowed in your equity grant, you may want to do an early exercise and file certain tax forms now in order to save on taxes in case of a future liquidity event.

  • Calculate Potential Scenarios

    Based on your strike price and current and future Fair Market Values (FMVs), you should have in mind several scenarios and cost/tax outcomes for both short- and long-term budgeting for tax payments, which can be substantial.

Common Mistakes

  • Miscalculating value of equity
  • Missing tax opportunities
  • Having too much concentrated risk in your portfolio

How can advisors help?

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  • Certified Public Accountant (CPA)

    Tax Traps and Advantages

    File the right paperwork by their respective deadlines to take in order to maximize the value of your equity and minimize your tax bill.

    Strategic Timing

    Reconcile with previous equity grants, and plan to file taxes strategically over the next multiple years, if necessary.

  • Trust & Estate Attorney

    Founders and Investors

    Consult an attorney if your equity makes up a large percentage of ownership in the company and/or if you anticipate there may be significant long-term appreciation.

    Transferring to a Trust

    Transfer your company stock to a trust while the market value is lower to potentially significantly reduce any gift transfer taxes and/or reduce your tax liability now and later if donated to a charitable trust.

  • Financial Advisor

    Investment Strategy

    Plan a diversification strategy to ensure that your equity compensation is not exposing you to investment risk.

    Accurate Projections

    Know exactly how much you’ll have to pay and potentially gain in several equity scenarios.

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Unrealized Value

$105k

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Pairing Attributes
  • Business Tax
  • Impact Investing
  • Biotech Expertise