The Executive With $4M in Company Stock and Nowhere to Go
Case Study Summary
A senior executive had accumulated nearly $4 million in company stock through years of equity compensation. The position was enormous — and so were the embedded gains. Selling and diversifying seemed impossible without triggering a catastrophic tax bill. But there were options she hadn't considered.
The Concentration Risk Problem
Executives and employees who receive equity compensation often find themselves with significant wealth tied to a single stock. This creates both financial risk and a tax dilemma: selling to diversify triggers capital gains, but holding means continued exposure to one company's performance.
Strategies for Tax-Efficient Diversification
Several strategies exist to reduce concentration without triggering immediate, full capital gains taxes. These include exchange funds, charitable remainder trusts, hedging structures, and installment sales. The right approach depends on the specific securities, the individual's tax situation, and their long-term financial goals.
Building a Diversification Plan
A thoughtful diversification plan doesn't have to happen all at once. Staged dispositions, combined with complementary tax offset strategies, can reduce the overall tax burden significantly while still achieving the goal of a more balanced portfolio over time.
Who This Strategy Is Best For
- ✓Corporate executives with large equity compensation packages
- ✓Founders or early employees with low-basis company stock
- ✓Investors with concentrated positions in a single security
- ✓Individuals who have experienced significant stock appreciation
- ✓Anyone whose net worth is disproportionately tied to one asset
Explore Your Strategy
Speak directly with Rajiv Rebello to see how this strategy fits into your comprehensive tax plan.