“You Didn’t Work This Hard Just to Give a Third of It to the IRS.”
After years of 60-hour weeks and hitting every target they threw at you, your reward? RSUs. ISOs. Company stock as far as the eye can see. That’s a good thing!
But here’s the catch: equity compensation isn’t cash. And without a plan, it can cost you tens of thousands in surprise taxes, missed opportunities, and painful missteps.
You've earned it. The question is: how do you keep it? Here are the three biggest mistakes we see executives make - and how to avoid them.
Mistake #1: Letting RSUs Vest Without a Tax Plan
RSUs are easy to ignore—until they blow up your tax return.
When your RSUs vest, they count as ordinary income. That means a chunk of your comp is taxed - whether or not you sell a single share.
Why this hurts:
- Your company withholds taxes - but usually not enough
- You get bumped into a higher tax bracket
- Surprise tax bill hits months later - just when you thought you were in the clear
What to do instead:
→ Run a proactive tax projection before your vesting dates
→ Work with your CPA to align withholding with your actual tax rate
→ Use tools like donor-advised funds or tax-loss harvesting to offset the impact
“We’ve seen executives hit with $15K–$60K surprise bills—all because they assumed payroll had it covered.”
Don’t wait for the IRS to send the wake-up call.
Mistake #2: Exercising ISOs Without Understanding AMT
ISOs can be gold - or a trapdoor.
Take Mark (not his real name). He exercised $200K of ISOs in December to qualify for long-term capital gains. Smart move - until AMT showed up.
Come April? A $53,000 tax bill. No liquidity. Down market. Forced share sale.
What went wrong?
- Exercising ISOs doesn’t trigger regular income tax…
- …but it does count under AMT
- Waiting until year-end means no time to fix it
What to do instead:
→ Exercise earlier in the year to preserve flexibility
→ Run AMT projections before you make a move
→ Don’t be afraid to “disqualify” shares (sell early) if liquidity or risk is tight
Alphabet soup like ISO and AMT hides the real danger: poor timing equals painful surprises.
Mistake #3: Holding Too Much Company Stock
You believe in the company. You’re proud to lead it. But too much loyalty can put your financial future at risk.
If 15%+ of your net worth is in one stock - especially your employer’s - you’re exposed.
Why this is dangerous:
- A single market move hits your income, net worth, and retirement plan
- Your compensation, bonus, benefits - and investments - all rise and fall together
- You’re all-in whether you mean to be or not
What to do instead:
→ Set up a 10b5-1 plan to sell shares over time
→ Explore exchange funds to diversify without selling (for HNW holders)
→ Stress test your financial plan for market drops
You wouldn’t invest your retirement in just one stock - don’t let inertia do it for you.
The Takeaway: You Don’t Need a Raise - You Need a Smarter Plan
You’ve earned your equity. Now it’s time to keep more of it, grow it wisely, and avoid landmines that catch even the smartest executives off guard.
The good news? We’ve created a guide that goes beyond quick fixes and dives into what it really takes to build lasting wealth.
[Download Creating a Comprehensive Wealth Plan for Executives]
Inside, you'll find clear strategies to:
- Maximize your equity compensation without tripping tax wires
- Diversify beyond company stock while protecting your upside
- Align your financial plan with your values, goals, and legacy
Whether you’re managing RSUs, ISOs, ESPPs, or just trying to make sense of a complex compensation package, this guide gives you the structure and clarity you need to make smart, confident decisions - today and for years to come.
You’ve earned the wealth. Let’s make sure it builds the future you want.
Want help building your equity plan?
Book a strategy call → and let’s make taxes, timing, and diversification a strength - not a source of stress.
If you would like to discuss your current situation schedule a free 20-minute call with the link below.
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