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Corporate Executive Planning

July 2019

By: Shad Lamm, CRPC®

As a successful corporate executive, you face complex financial challenges. Your personal wealth is directly tied to the success of your company. The countless hours you spend at work make it difficult to focus on your personal financial health. You’re paid in the form of stock options, fringe benefits, bonus plans, and non-qualified deferred compensation plans—all of which add to the complexity of your financial picture. 

On top of the stress that comes with your job, you also have a list of financial concerns:

  • How can I plan for and mitigate taxes?
  • How can I hedge my company stock holdings and increase my income?
  • How do I avoid concentrated stock options and diversify my portfolio?
  • What’s the best way to manage my company 401(k)?
  • How can I secure my personal financial future separately from my employer’s financial future?

At Cypress Wealth Services, we have a specialized focus on corporate executive planning. We offer comprehensive financial, estate, and tax planning, along with personalized diversification strategies designed to reallocate your assets and protect the value of your stock.

Let’s take a moment to talk about some of those stock options and the types of strategies we use to protect them.

Types Of Stock Options

As an executive, your pay structure includes equity compensation. This type of pay provides a strong incentive to work hard and increase your company’s success. As the value of the company increases, so does your equity.

Some common types of stock options include:

  • Employee Stock Options (ESOs)
  • Nonqualified Stock Options (NSOs)
  • Restricted Stock Units (RSUs)
  • Incentive Stock Options (ISOs)
  • Performance Shares (These are usually awarded after meeting certain performance measures set by the company.)

These stock options are all subject to different tax rules, vesting periods, and risk factors. And unless you’re well-versed in finance and economics, it can be difficult to sort through them all.

Implementing a specialized investment strategy is the best way to minimize your tax impact and maximize your equity compensation.

Let’s talk about 3 common investment strategies we use at Cypress Wealth Services.

Common Strategies For Protecting Stock Value

Strategy 1: Exchange Fund

An exchange fund is where you take large concentrated stock vehicles and exchange them for units of a diversified portfolio. This is a great strategy because it diversifies your portfolio and defers capital gains taxes.

Strategy 2: A Protective Collar

A protective collar is a financial transaction that hedges the value of your stock. It’s put in place for a set amount of time (such as a month or a year). The collar consists of two parts: a cap and a floor. The cap is the amount you don’t want the stock to go over. The floor is the amount you don’t want it to dip below. Once the collar expires, you examine where your stock fell relative to the cap and the floor.

Strategy 3: Variable Prepaid Forward Sell

This strategy focuses on short-term liquidity. You receive 75-90% of the value of the stock immediately, which you can use to pay down debt or diversify your portfolio. Because this is a prepaid sell, your money is technically still in the market. The transaction isn’t taxable and you continue to receive dividends until it reaches the expiration date.

All of these strategies come with benefits and consequences, and it can be difficult to know which strategy is best for you without consulting a financial advisor.

How We Help Corporate Executives

As a successful corporate executive, you have unique needs and goals. Your financial security is disproportionately tied to your employer. You have a complex benefit plan. You’re subject to a unique set of legal risks. And you’ve probably accumulated a large number of stocks in your company, resulting in unnecessary portfolio risk.

You need a trusted financial advisor who specializes in corporate executive planning. That’s where Cypress Wealth Services comes in. We work with you to secure your financial future. We help you create a personalized financial plan, implement a specialized diversification strategy, and everything in between. To learn more about our corporate executive planning services, contact one of our offices today.

About Cypress Wealth Services

Cypress Wealth Services is an independent RIA firm providing financial planning and investment management to high net worth individuals, families, business owners, and institutions. Cypress Wealth Services comprises professionals with diverse backgrounds and extensive experience and qualifications. Cypress Wealth Services is uniquely qualified to serve a broad range of client needs, and their experience and expertise act as a foundation for their client service process. The firm uses The Second Growth, which focuses on efficiently protecting, growing, and transferring to their loved ones the wealth and legacy a person has already built. With offices in Palm Desert, CA, Tustin, CA, and Anchorage, AK, the firm serves clients across the country in Wealth Management Services, Fiduciary Services, 401(k) Design and Management, Investment Reporting Services, Financial and Retirement Planning, and more. For more information, visit or call 760.834.7250.