Executive Stock Options, Restricted Shares and Restricted Stock Units — What’s Best for You
One week ago, on Tuesday August 3, 2021, the website Ivy Exec published under “Career Advice” an article I wrote on “Executive Stock Options, Restricted Shares and Restricted Stock Units — What’s Best for You”.
This new article is designed not only for C-level and senior executives, but even for many directors and mid-level executives, where a major part of executive compensation involves executive equity in the employer company. This article is intended to assist executives in those negotiations by setting out key things to look for in your equity package, including the level, tax structuring and terms of equity compensation.
The article discusses the merits and issues among the four main choices for structure of equity:
- ISOs — Incentive stock options, qualified under the tax code,
- Non-quals — Non-qualified stock options,
- Restricted Stock — where you are actually issued shares and might want to make a tax election to take unvested shares into income, and
- RSUs — Restricted Stock Units, where stock is also issued and taxed as it vests.
My article first discusses where equity might achieve its highest value for you using important favorable tax leverage, and then the level of equity to seek appropriate to your position. The remainder of my article goes over the different circumstances under which each of the four main equity choices can be beneficial to you, to help you determine which structure is best for you in your case.
To see my full IvyExec Career Advice website article, go to LINK: https://www.ivyexec.com/career-advice/2021/executive-equity-structure/
IvyExec hosts articles and webinars from experts in the career, leadership, and business spaces who wish to share their knowledge with our audience. In April 2021, I was invited to write for IvyExec since it seeks original content on the topics of career development, leadership, and business strategy as it applies to senior-level and C-Suite professionals. IvyExec blog posts and webinars are shared with its community of more than 2 million members on its website, in its newsletter, and on its social media channels. https://www.ivyexec.com/career-advice/write-for-us/
It is my hope that this article will be of benefit to C-level and senior executives who have the opportunity or should have the opportunity to gain an equity stake in the company that their management skills and efforts or helping to build, so that you along with the investors can share in the benefits of that company growth. This article discusses the merits of the four main choices among equity structures. Taxation and financial benefits differ among them. As I tweeted… One size does not fit all. So, I hope this article will be instructive for you. Feel free to share this article. If you or any colleague of yours has a need in this area, please do reach out to me.