Hey Reader,

A few years ago, I started working with a client with ~$16mm in company stock.

Don't get me wrong, that's a lot of money.

But six months before that, it was worth over $50mm.

The drastic change in his situation was the wake-up call he needed to create a plan.

Our work together helped him avoid disaster and sparked my passion for equity planning.

Here's how it all went down...

Background

He was a high-level executive with over 200,000 company shares and stock options.

The two main reasons he hadn’t sold or exercised stock:

1. He didn’t want to seem disloyal to his company.
2. He was a company insider subject to strict trading rules that he didn’t know how to navigate.

The result: a massive concentration in company stock and a future dependent on the share price.

The Art

When we started working together, our #1 priority was creating a 10b5-1 trading plan to comply with SEC insider trading rules.

But first, we needed a financial plan.

We started by discussing the following:

• He and his spouse’s values, needs, wants, and desires.
• The money they needed and when they’d need it.
• How they would feel if they didn’t sell and the price fell further.
• How they would feel if the price reached all-time highs after they sold.
• How they prioritized accomplishing their goals with the potential for further growth.

Then, we used that information to outline:

• How many shares to exercise/sell at the current price.
• How many shares we'd exercise/sell within +/- 50% of the current price.
• How many shares we'd keep in case the stock reached all-time highs again.

The Science

Now that there was a plan, we had to develop the most efficient and tax-conscious strategy for executing it.

This starts with a meticulous inventory of every share’s equity type, acquisition date, expiration date, strike price, cost basis, and other details.

Some of the things we considered:

• Cash needed to exercise ISOs
• Potential AMT liability and credit
• Price targets to exercise/sell options
• How much cash to set aside for taxes
• Price targets to sell shares held outright
• Exercise priority based on option variables

By the time we were finished, the plan covered over 30 price points.

What Happened?

This is where planning meets opportunity.

The stock jumped ~50% within 4 months, and he took millions off the table.

The stock performance was completely out of our control, but this time, he could take advantage of the opportunity instead of watching it pass by.

But here's where planning really makes a difference...

Three months later, the stock fell 50%.

Today, the stock is down over 80% from where he last sold.

Had he waited another year to make a plan for his equity, he would have missed the opportunity to change his family's life forever.

Conclusion

I worked with this client before I started Unrivaled, but we still keep in touch.

Every time we speak, he tells me how our planning changed his family's life.

Thankfully, he took advantage of his opportunity before it slipped away.

Make sure you have a plan for your equity so you can say the same.

If any of this sounds familiar, let's take care of it before it's too late!

Have a great rest of your week!

PS - If you...

• Want practical advice on how to reach your financial goals
• Don't have time to properly manage your financial situation
• Need help navigating the financial ramifications of a significant life event

That's what we do.

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Disclaimer:

This is for general educational and illustration purposes only. This should not be taken as individual investment, tax, or legal advice.

Consult your legal, tax, and financial team before implementing any financial strategies for your specific circumstances.