Did your long-term incentives recently vest? Here’s what to consider next:

1 – Review the stock price.

Depending on your incentive plan, the value of vested stock is typically paid in cash or shares. If paid in cash, proceed to step 2. If paid in shares, review the stock price and determine whether it makes sense to hold or sell the shares. While it’s impossible to time the markets, several tools are available to help you make an informed decision. Executives also need to be aware of blackout windows and whether they are privy to material nonpublic information. In other words, make sure you’re allowed to sell the stock before you sell it.

2 – Review your goals.

  • If you have cash, consider paying down short-term debts (i.e. credit cards) first, then build a three- to six-month emergency cash reserve for life’s inevitable curve balls.
  • Next, review your financial goals and separate your “needs” (normal living expenses) and “wants.” Prioritize funding your needs first. Regardless of your earned income situation, stick to a budget. Your ability to live within your means and maintain a disciplined savings plan will be the main driver of the success of your plan.
  • Next, consider adding the cash (or vested shares) to a well-diversified portfolio to help keep your plan on track with your retirement and life goals. Note: Vesting events can be the single largest wealth acceleration tool for executives. It’s important to take full advantage of this savings and growth opportunity.

3 – Review your financial plan.

Do you have a financial plan, and is there a clear path to funding your goals? Whether you’re funding your child’s education, buying a second home, or saving more and retiring early, vested stock can be one of the most effective ways to help bring successful outcomes for executives. Taxes are almost always a burden for executives, and an advisor’s goal is to help you minimize the risk of potential “surprises.”

4 – Speak with a specialized financial advisor.

A specialized financial advisor can assist with developing and executing a strategic tax and divestiture plan, including when and how to sell (or hold) vested stock, as well as to help provide accountability as you pursue your financial goals.

Finally, did your company recently issue new grants? Be sure to review and understand the award agreements before signing. It can feel overwhelming and complicated, especially with a quick deadline. Savant has a team of specialized advisors to handle the unique situations of executives. Please feel free to reach out today.

This is intended for informational purposes only and should not be construed as personalized investment advice. Please consult your investment professional regarding your unique situation.

Author Matthew P. Witter Financial Advisor

Matt specializes in guiding senior level executives of public companies toward personal financial peace of mind. More specifically, he helps manage the complexities of their stock-based compensation.

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