Insight Ratio: The Stock Option Exercise Secret

Determining the right time to exercise and sell  one's employee stock options is the key to maximizing the value of this benefit. Stock options are granted at a fixed grant price that must be exercised after vesting and prior to the expiration date to realize their value. During the time between vesting and expiration (usually 10 years after the grant date) the current stock price for publicly traded companies will generally fluctuate significantly and no one can predict the peaks...

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Maximizing Restricted Stock Awards

Financial advisor and StockOpter user Megan Gorman in her Forbes article How A Restricted Stock Strategy Can Maximize Your Wealth has some great tips for restricted stock recipients. Megan explains "Restricted stock is simply shares issued to an employee that cannot be transferred to them until certain conditions have been met. These conditions can be time- or performance-based." However she continues, "while restricted stock creates great upside potential, if employees do not know how to manage the risks, they might...

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Market Volatility and Employee Stock Option Values

The stock market has been on a roller coaster over the last few months, but in general the S&P 500 index is still near its all time high. Consequently, most employee stock options granted in the last ten years are likely to be significantly "In-the-Money" (current stock price above the grant price) as illustrated by the above chart. This chart shows the S&P 500 over the past decade. It can be used as a general representation of the prices at...

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Modeling Owned and Restricted Share Diversification Scenarios

IMAGE: Natalie Rhea Riggs / Unsplash Advisors and their clients with sizable holdings of employer stock will both benefit from systematic share diversification of these positions. For the client it means reduced risk and peace of mind, and for the advisor it means additional assets under management. Most executives will agree that concentrated company stock positions are risky and diversification is financially prudent, but taking timely action is often a different matter. There are a number of factors that may...

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NQSO No No

IMAGE: Gemma Evans/UnSplash.com Too often I hear from financial advisors that their clients are considering exercising their non-qualified employee stock options (NQSOs) early (i.e. several years prior to expiration) and holding the shares for at least 1 year to get long term capital gains tax rates when they sell the shares. This may seem like a reasonable tax strategy, but it really isn't and here's what clients need to know. Unlike Incentive Stock Options (ISOs), NQSOs are NOT tax advantageous....

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5 Things You Should Know About Your Employer Stock & Options

This infographic can be used to promote professional equity compensation guidance to clients and prospects that receive company stock and options. These five concepts are included in the StockOpter.com client deliverables.  They have proven to be very effective at engaging stock plan recipients and helping them to make timely, informed and profitable decisions. These concepts are not illustrated on stock plan participant portals or using general financial planning tools. Click on the image below to view and print this infographic....

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8 Terms To Understand Regarding Your Stock Compensation

IMAGE: Nonwarit / 123RF Stock Photo If you have recently started receiving stock compensation from your employer or are considering going to work for a new firm that offers equity as part of their compensation package, here are eight terms that you may need to understand. 1) Stock Options: If you receive employee stock options, your employer is offering you the right to purchase shares of the company stock at a predetermined price and for a specified period of time. ...

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Four Financial Ideas on Your Work Anniversary

By David C. Gratke, Principal at Gratke Wealth, LLC It’s another work anniversary and a good time to reflect on where you are in your career both professionally and financially. It couldn’t be a better time to also take stock of where your overall financial plan is currently, and whether or not you are on track to make work optional. Here are four smart financial ideas to consider on this work anniversary. 1) Rule of 1/3rds- Your work anniversary often...

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Legislative Update: Empowering Employees Through Stock Ownership Act Resurfaces In The Senate

IMAGE: Jordan Kidds / 123rf.com This blog post is provided by myStockOptions.com, a leading source of educational content on all types of stock compensation. While stock options continue to be popular at startups and other pre-IPO companies, employees cannot sell stock at exercise to pay the exercise price and the taxes on the income. Moreover, under current law those taxes cannot be delayed. Last year, an encouraging legislative proposal was introduced in the House of Representatives to address this issue....

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Six Trends in Performance Awards

IMAGE: Przemyslaw Koch / 123rf.com Barbara Baksa, Executive Director of the National Association of Stock Plan Professionals (NASPP) identifies six trends in the usage of performance awards, from the 2016 Domestic Stock Plan Design Survey, co-sponsored by the NASPP and Deloitte Consulting. Trend #1: Performance awards are on the rise for executives. Over the past four survey cycles, we’ve seen a more than 100% increase in the use of performance awards at the NEO and senior executive levels. For NEOs,...

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