Executive Shouldn’t Go It Alone When Their Company Goes Public

The medical director for a fast-growing private medical device company, Josh, 45*, has been handling his own investments for years.  His $400,000 in investments require very little tending – the majority is in his company’s 401(k) account. Free from financial minutiae, Josh is a theatre goer, making occasional excursions to New York to keep up with Broadway’s latest lineup.
While having no inside information, Josh deduces his company may be filing for an initial public offering (IPO) next year. Thanks to some pre-vest incentive stock options (ISOs) he exercised last year, Josh expects he may realize as much as $1 million in pre-tax dollars. He’s glad he did the early exercise, even if he hadn’t fully understood the probable implication of locking-in optimal tax savings.

His back of the envelope post-IPO stock value would be his largest financial asset and may move him into the millionaire’s club. As a PhD in research, Josh is smart enough to realize more financial sophistication is required. After the possible IPO, executives will be forbidden to sell during the 180-day lockup period.  He’s heard of limits detailing how much company stock an executive can sell at once and he wonders if a sale could trigger the Alternative Minimum Tax. There’s so much to learn; he’s willing to admit this may be the time to seek further advice.

Fact-driven by nature, Josh needs to understand what he can and cannot do as an executive of a likely-to-be public company.  He wants to get the facts and avoid unforeseen costs and taxes from what he doesn’t know. He’d like to establish a relationship with a financial planner who can help him build an investment plan and provide specialized professional advice. Getting set up now will help him know where to turn after the IPO, if it happens, and what to do when he eventually sells his shares.

At SFG Wealth Planning, we are experienced in helping executives navigate their stock-based compensation and planning challenges. We draw from our training in financial planning, executive compensation and investments.  Josh will work with his financial advisor at SFG Wealth Planning Services, Inc., to develop a plan to consider the investment, tax and regulatory considerations that will affect him in advance of the promise of his company’s public offering.

*The name, likeness, and circumstances in this example are a fictional composite of facts from executives similar to actual SFG Clients.

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Executive Compensation, Non-Qualified Deferred Compensation, Performance Stock Units, Restricted Stock Units, Retirement Planning, Stock Options

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