Category: financial planning

Simplifying the Equity Compensation Complexities: Keep it, Spend it, or Save it

If you’re wondering how to maximize the value of your incentive stock options (ISOs), non-qualified stock options (NQSOs), restricted stock units (RSUs), or other forms of equity compensation, you’re not alone. After all, there is plenty to think about if you’ve been granted equity compensation. You may dream of how to strike it rich. You may fear you’ll do something wrong and miss out. You might become mired in taxing technicalities, including AMT calculations. All that thinking can backfire if “TMI” (too much information) prevents you from proceeding.

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Cash vs. Cashless Exercise – The Employee Stock Option Conundrum

When you exercise your employee stock options, you may want to consider one of the following options to implement the exercise: A cash exercise, or a cashless exercise. This is not an exhaustive list of options.  You may run across other terms such as sell-to-cover, same-day sale, or share withholding.  While some of these terms are interchangeable and result in a similar outcome, you should check your plan details prior to implementing any specific exercise strategy.

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Dive Deeper

Whether you’re just getting started or expanding your knowledge, here are some resources to get you started.

Hi, I'm Daniel Zajac, CFP®, EA

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I write about equity compensation and employee stock options in a way that is easy to understand.