Equity Compensation Planning

Equity compensation is a form of pay tied to company ownership, often in the form of stock options or RSUs.

Most people understand the basics. The complexity tends to build quietly over time as multiple grants overlap and decisions start to interact.

At a certain point, it becomes less about understanding what you have and more about how those decisions affect each other, especially from a tax and risk perspective.

That’s typically when people step back and realize they want a more structured approach rather than continuing to piece it together on their own.

There isn’t a single “right” time to exercise your stock options. It depends on your tax situation, your company’s outlook, your cash flow, and how concentrated your net worth already is.

The decision can materially affect your tax exposure and overall risk, and in some cases the timing is not easily reversed once action is taken.

What we see most often is people making this decision in isolation or based on partial information, especially as their compensation becomes more meaningful.

As the stakes increase, many prefer to step back and evaluate the full picture rather than continuing to carry that decision-making on their own.

RSUs are typically taxed as ordinary income when they vest, based on the value of the shares at that time.

Any additional gain or loss is taxed as capital gains when the shares are sold.

Where this becomes an issue is that withholding is often not aligned with your actual tax rate, which can lead to underpayment that only becomes clear later.

Many high earners assume it’s handled and only realize the gap at tax time.

This is one of those areas that feels straightforward early on, but becomes more important as income and grant size increase.

A useful way to think about this is:

If you were paid this amount in cash, would you choose to buy your company’s stock today?

Most people don’t naturally frame the decision this way and end up holding without a clear strategy.

Over time, that can lead to a level of concentration that doesn’t align with their broader goals and isn’t always obvious as it builds.

As portfolios grow, many people prefer to have a consistent framework guiding these decisions rather than revisiting them each time a grant vests.

Equity compensation often builds quietly over time, often without a clear point where it feels urgent to address.

At a certain point, your income, your career, and a meaningful portion of your net worth are all tied to the same company.

That level of exposure can work in your favor, but it also increases downside risk in ways that aren’t always obvious until they matter.

This is typically when people want a more intentional plan around how and when to diversify.

Most people don’t start out feeling overwhelmed by equity compensation.

The shift tends to happen gradually as multiple grants accumulate, income increases, and more of your net worth becomes tied to your company.

At that point, decisions around exercising, tax exposure, and concentration risk begin to interact in ways that are not always easy to unwind.

That’s usually when people decide they don’t want to carry those decisions alone and prefer a more structured, coordinated approach.