Personal Equity Compensation Planning


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Our Equity-Based Compensation Planning service helps you to optimize your plan assets to achieve your personal financial goals.

Equity-Based Compensation Planning includes not just tax planning, but also planning to determine when to exercise your company stock options and how much to exercise for portfolio diversification.

“Exercise Now or Later?”
White Paper

(Excerpt)

For starters, stock option compensation should be an integral part of your personal financial portfolio, and they should not be treated in a vacuum. Instead, treat your options as part of your overall diversified portfolio for meeting personal financial goals. For example, if your financial goal is somewhat secured already, then you may be able to take on higher risk with your options (such as holding them until expiration); but if your goal is far from being met, particularly if you are approaching retirement, you may want to be more conservative and to secure the in-the-money-value of your options sooner rather than later.

The Exercise Now or Exercise Later decision is driven by a number of decision criteria, including events such as future vesting events, expiration, understanding the values that I wrote about in my blog articles (you can read them by clicking here), and two other key ratios.

Insight Ratio

First is the Insight Ratio: The Insight Ratio represents the remaining theoretical potential in each grant. A higher Insight Ratio would mean that there is still some future potential value left in the options, and continuing to hold the option for later exercise and sale may be a more viable alternative. A lower Insight Ratio, on the other hand, would mean that most of its value is already in-the-money, and continuing to hold the options may expose them to market risk and volatility.

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