More than ever, companies are using equity compensation strategies—options, restricted stock units and other financial tools—to align employee interests with those of the company. In theory, this is a simple idea. But in execution, it can often be laden with complicated tax consequences, uncertainty over future income, and lumpy effects on your wealth and planning.
Over the years, the McLaren team has helped clients work through dozens of equity compensation situations to find tax- efficient resolutions, stay ahead of the curve in terms of strategy, and help reduce highly concentrated positions for those who have accrued significant individual company risk.
Among the situations we've encountered are:
- A business acquisition in which employees are given cash payouts in exchange for their current interest
- Ongoing restricted stock awards where concentrated risk in a single business, which is also an employer, becomes a red flag in a client's financial life
- Highly appreciated positions that limit tax flexibility
- IPOs with previously private equity positions
Whether your plans involve selling the entire equity of a business you've built or selling a single restricted share in a large company, proper planning can help ensure that you’ll keep more of the money you make, and that you reinvest in a diversified, prudent manner.