Compensating employees with some form of equity has become a fairly common practice among employers. This may come in several flavors, including paying employees in restricted stock units, employee stock purchase plans, incentive & non-qualified stock options. In today’s episode of Grow Money Business, Grant dives into how these programs work, how they’re taxed, common issues employees face when they’re compensated with equity, and a strategy that allows employees to benefit from equity compensations while reducing their tax bills. Stay tuned for some important considerations if you are paid in company stock.

 

 

Show Notes

[02:48] Common Issues – Grant starts the conversation by sharing his thoughts on two common issues that employees face when they are paid in company stock.

[04:51] Risks Associated with Company Shares – Grant talks about some of the disaster stories of a few companies that put their employees in deep financial trouble with equity compensations. However, he also talks about how equity compensations can create a whole lot of wealth for employees if the company continues to flourish.

[07:01] Restricted Stock Units – Grant reviews a few common equity compensation programs, starting with RSUs, a performance-based method of compensating employees.

[09:57] Employee Stock Purchase Plans – While rare among private companies, employee stock purchase plans are quite common in publicly traded companies. Grant dives into how these plans are taxed and the pros and cons of these plans.

[13:35] Incentive & Non-qualified Stock Options – Grant dives into some of the benefits of another two types of equity compensation and what employees should keep in mind about them.

[15:23] Strategy – Grant shares his out-of-the-box strategy of utilizing equity compensation that allows employees to pay as little tax as possible.

 

Resources

Employee Stock Options: The Top 5 Mistakes That Leave Money on the Table:
abovethecanopy.us/employee-stock-options-the-top-5-mistakes-that-leave-money-on-the-table