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The Truth about Equity Compensation Plans

The Truth about Equity Compensation Plans

Photo Credit: Images_of_Money

Understanding the options associated with an employee’s equity compensation plan can be a daunting feat to say the least, but dispelling common myths and misconceptions can help you better understand the programs you have access too. The following are some of the common misconceptions and the truths that we encountered with equity compensation programs.

What you’ve heard:  My company’s stock options are far too simple to require any consultation services or strategic planning.

Here’s the truth: By seeking professional advice, you are increasing your chances for profitable gain. Mistakes in financial situations are incredibly costly and can set you back immensely. With the help of financial specialists, you are safe guarding your investments.

What you’ve heard: I have restricted share grants, so I don’t need to manage any of my other options.

Here’s the truth: All of your outstanding options should be watched constantly. While little is required by you for restricted share grants, other options may expire and thus require attention at all times, to ensure that all financial opportunities are taken advantage of.

What you’ve heard: There are only three times that I should ever sell my stock options. I either need quick money, my shares will expire or the target pricing has been reached.

Here’s the truth: While there are three common factors to consider, they are not the three we have listed above. With the help of professional financial planners, you can find the best time to exercise your options according to factors like time value, your personal concentration and your long-term goals.

What you’ve heard:  Taxes can be avoided.

Here’s the truth: Taxes are a mandatory requirement within equity compensation plans and stock options. It is an unavoidable occurrence, but once again with the help of an effective financial planner, your tax liability can be positively managed.

As with any financial plan, consulting experts and doing research will help ensure a positive future. If you are looking to seek advice on your equity compensation plan, we encourage you to contact Stock Connections. We specialize in equity compensation plans and are prepared to answer any questions you might have.

 

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