The Equity Compensation Guidebook

In today's episode, I'm going to jump into the general personal finance arena. Let's talk about mortgages. Specifically, to pay them off early or not. I’ve shared some thoughts on this subject before on my website but with mortgage rates near all-time lows, I figured it was time to revisit. 

The topic of whether or not to pay off a mortgage early is a question that often comes up in client conversations. Heck, it even comes up when I'm out for a beer with friends. Well, at least back when we were able to do that sort of thing! My initial response is usually this, odds are the numbers are going to show that it makes sense to maintain a mortgage. Paying off a mortgage is often a personal decision but if you’re looking for ways to grow your money instead of paying off your house early we should talk!

• Reasons you should not pay off your home early [1:16]
• Paying off a house doesn’t mean housing expenses go away [2:10]
• Why you should pay off your mortgage early [3:27]
• This week’s FLASHBACK [5:19] 

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In today's episode, I'm going to quickly talk about stock splits, both regular and reverse. Reverse stocks you wonder? They do exist even though they are rare. Even though this is a relatively straightforward issue, I wanted to cover it a bit for a couple of reasons. First. I never want to assume everyone understands what a stock split is. The second is because it's front of mind as Sherwin-Williams, which is my neck of the woods recently announced a three-for-one stock split.

• What is a stock split? [1:08]
• Why split a stock? [2:57]
• What are reverse stock splits? [3:47]
• Dates to know when it comes to splits [4:32]
• This week’s FLASHBACK [5:40] 

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In this episode of the Equity Compensation Guidebook, I'm taking a break from talking directly about equity compensation. However, I'm staying within the world of personal finance, so don't tune out just yet. The topic today is the rule of 72. Rule may be a strong term, it's more of a guide. But everyone calls it a rule so that's what we're going with here. The rule of 72 has to do with compounding, and what's more fun than the power of compounding, right? 

• How long will it take to double your money? [1:31]
• This week’s FLASHBACK [4:07] 

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In today's episode of the Equity Compensation Guidebook, we're going to touch on one of the biggest questions in personal finance. How to transition to retirement? Specifically, as it applies to the world of equity compensation. I'm giving some official disclaimers right upfront. Retirement is almost never a simple decision. Even if you have lottery winnings, there are a lot of individual decisions that need to be made before you can make the big one of transitioning to retirement. There is no uniform rule on the right amount of money needed. There is no magic number but there are some steps to planning and today I’m going to break it down into 5. 

• One of the biggest questions in personal finance [0:21]
• Taking inventory of your equity compensation positions [2:32]
• Adding up the value & concentration risk [3:27]
• Gathering documentation [4:07]
• Review documents to know what happens with unvested or unexercised positions [4:34]
• Developing a plan around each stock option [5:15]
• This week’s FLASHBACK [7:21] 

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In episode 22 of the Equity Compensation Guidebook, we are talking about exercise. I'm sure you're tired of hearing about exercising in the new year, but the exercise we're going to cover is that of stock options. While it may not strengthen your health, it certainly may strengthen your wealth! There is a simple way to exercise your options and a way that requires a little more effort. However, if you want to optimize things and keep your tax bill lower you may want to listen on.

• First things first… NSO’s...TAKE THEM! [1:04]
• Don’t miss those deadlines especially when you’re in the money! [2:40]
• Waiting to exercise [4:08]
• Exercising options as soon as possible and holding [4:44]
• The best way to figure out your best course of action [5:55]
• This week’s FLASHBACK [7:38] 

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Welcome to episode 21 of the Equity Compensation Guidebook and the fourth and final episode of our mini-series. Today we're going to tackle the topic of the good old 83B election. WARNING: we are going to talk about taxes. However, I promise I’ll do my best to keep it a step above boring. In this episode, I’m going to tell you what an 83b is and why someone would elect to go this route. I’m also going to share the advantages and the potential risks. Enjoy the show!

• What’s an 83b election? [1:00]
• Why would someone go the 83b route? [3:14]
• The risk to keep in mind when deciding [6:14]
• Mitigating some of the risk [7:19]
• This week’s FLASHBACK [9:02] 

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Welcome to the  Equity Compensation Guidebook and episode 3 of our mini-series. Today I will break down precisely what a non-qualified stock option— commonly referred to as an NSO— is. I won’t be covering incentive stock options since 95% of stock options are non-qualified and I don't work with any clients who have ISO's. If I tried to explain the ISO I'm sure it would be a mess since I don't cater to those clients. NSOs are not super complex. The complexity with NSOs comes into play when you exercise the options and while we'll touch briefly on that, I'm going to save that minutia for another episode.

• What is an NSO? [1:19]
• Important time periods when it comes to NSOs [2:49]
• When to exercise and how to pay for your options [4:05]
• What to expect when it comes to taxes [6:16]
• This week’s FLASHBACK [7:28] 

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Today is part two of our series on restricted stock. Last week we talked about restricted stock units and this week we are talking restricted stock. You may hear it referred to as restricted stock awards, restricted stock grants, or stock grants. However, for this episode, we will simply stick with restricted stock. Now, you may be wondering what the difference is and why does it matter? Well, that is precisely what you will take away from today’s show. You’ll also learn about some of the benefits that come along with the RSA that you won’t get with the RSU so be sure to check out episode 19 of the Equity Compensation Guidebook!

• The key difference between restricted stock and restricted stock units [0:50]
• Advantage of restricted stock versus restricted stock units [2:34]
• What happens once you’re fully vested? [3:53]
• What does the 83b election do and what’s the advantage? [5:36]
• More ability to plan for taxes [7:40]
• This week’s FLASHBACK [8:51]

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In this week's episode, we're going to start diving into using equity compensation to pay for college. It should be rather straightforward, right? Just sell some equity compensation, pay the applicable taxes, and then use whatever's left to pay tuition. I guess that is kind of simple, isn't it? Of course, doing it both effectively and efficiently is another story. Things such as optimizing any financial aid from the college you may qualify for, not messing up your future retirement plans, and as always not tipping Uncle Sam by paying out more in taxes than necessary. Listen up as we get down to the details! 

• Selling equity compensation positions and using proceeds to pay for college [1:23]
• Recap on NSO’s [3:06]
• Using restricted stock unit’s [6:24]
• Employee stock purchase plans [7:57]
• Why you should sell the positions with the smallest gains [10:16]
• This week’s FLASHBACK [12:43] 

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Today we will be talking about another important part of equity compensation, and that is concentration risk. Perhaps you’re wondering what exactly that is and how it happens so I’ve got a few examples to clarify it for you. I’m going to share some misconceptions about holding large amounts of a single stock, especially if it’s stock in the company you work for. We will also touch on some ideas to help mitigate concentration risk. Be sure to tune it so you don’t miss a thing! 

• Concentration risk… how it happens? [1:17]
• Learn from market history [3:01]
• Misconceptions about holding a large percentage of your portfolio in 1 stock [5:24]
• Ideas to mitigate concentration risk [8:27]
• Differences between stop orders and stop-limit orders [11:08]
• This week’s FLASHBACK [12:50] 

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