f you're a tech professional, executive, or employee receiving stock options or restricted stock units (RSUs), you know they can build long-term wealth. But without the right guidance, equity compensation can also lead to costly mistakes—especially around taxes, vesting, and selling decisions. At Schmidt Financial Management, we specialize in helping professionals make sense of equity compensation plans so they can make your equity work as part of a bigger financial picture.
Why Employee Equity Compensation Plans Matter
Equity compensation gives employees a financial stake in the company’s future. That could mean receiving company stock outright, or having the option to buy shares at a set price. In fast-growing companies—especially in tech—this often represents the biggest opportunity to build long-term wealth.
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But with opportunity comes complexity. And without a plan, what looks like upside can quickly turn into surprise tax bills, missed deadlines, or unnecessary risk.
Here’s what we’re seeing:
At Schmidt Financial Management, we help bring clarity to equity comp. From RSUs and options to ESPPs and performance shares, we’ll help you understand what you have, when to act, and how it all fits into your larger financial plan.
Tech professionals are often offered equity as part of their total compensation. Equity compensation gives you partial ownership in the company—potentially turning into real money if the company performs well. Below are the most common types used in the tech industry:
Understanding the types of equity your company offers is the first step toward building a smart plan. Here’s a breakdown of the most common forms—and what you need to know about each.
Stock options give you the right to buy company shares at a fixed price (called the strike or exercise price). If the market price rises above that, you can profit.
Incentive Stock Options (ISOs)
Non-Qualified Stock Options (NSOs)
✅ Talk to a financial advisor if you're unsure when to exercise or how to manage the tax impact.
RSUs are shares of company stock that are granted to you after certain conditions are met—usually time-based vesting.
✅ Read more about how restricted stock units (RSUs) work.
These are similar to RSUs, but they only vest if specific performance goals are achieved—like revenue growth or product milestones.
✅ Ideal for long-term thinkers—ask a financial advisor how to fit these into your
broader goals.
ESPPs let you buy company stock at a discount through payroll deductions.
✅ Read about how to maximize your equity compensation benefits elections with ESPPs.
These may not give you actual stock, but they still reward you based on company value.
✅ Ask how these fit into your full compensation picture—they often go overlooked.
Equity compensation can be used as a strategic edge for wealth building—but it’s rarely one-size-fits-all. A financial advisor at Schmidt Financial Management can help you map out a clear, customized strategy that fits your career goals, risk tolerance, and tax situation.
Each type of equity compensation comes with unique rules, tax consequences, and risks. To make the most of your equity, you should understand:
✅ Equity can be a powerful wealth-building tool, but without a strategy, it can also lead to unexpected taxes or missed opportunities. That’s why working with a financial advisor who understands tech compensation, like Schmidt FM, is essential.
Vesting determines when your equity actually becomes yours. If you leave the company before you're fully vested, you could forfeit some or all of it.
Common vesting types:
💡 Tip: Always check what happens to unvested shares if you’re laid off, switch jobs, or your company is acquired.
Taxes are one of the most overlooked—and costly—parts of equity compensation. The timing of vesting, exercising, and selling can have a huge impact on what you owe.
Here's what to know:
💡 Tip: Great tools exist for tax projections and scenario planning, but it's best to work with a financial advisor and tax professional for a smart strategy.
Your equity might not be as liquid or reliable as it seems. Company policies often limit when you can sell shares—and concentration risk is real.
Key things to keep in mind:
💡Tip: Plan in advance how you’ll diversify your holdings. A financial advisor can
help you decide when to sell, reinvest, or hold.
Your equity is more than a job perk—it’s a major part of your overall financial picture. How you handle it can shape everything from your tax bill to your timeline for buying a home or reaching financial independence.
Below are a few real-world scenarios that show how strategic planning (or lack of it) can make a big difference:
Sam joined a startup early and received ISOs with a low strike price. Years later, the company was preparing to go public. The stock value had soared—but Sam hadn’t exercised any options. When the IPO hit, Sam exercised a large number of shares all at once and triggered the Alternative Minimum Tax (AMT).
Lesson: Don’t wait until a liquidity event to exercise. A financial advisor can help you explore early exercise or staged strategies to reduce tax surprises.
Monica, a senior engineer at a public tech company, received regular RSU grants. When her shares vested, she worked with her advisor to sell a portion quarterly and earmark the proceeds for a home down payment. Within 3 years, she bought a home in the Bay Area without dipping into savings or taking on excess debt.
Lesson: Equity compensation can fund big life goals—if you plan ahead and sell strategically over time.
Diego maxed out his company’s ESPP, buying shares at a 15% discount and selling them shortly after purchase in a qualified disposition window. He reinvested the gains into a diversified portfolio. Over five years, those reinvested profits compounded significantly.
Lesson: Even small discounts can add up—especially when paired with a long-term investment strategy. A financial advisor can help you decide when to sell and how to reinvest.
Tina, a VP at a late-stage startup, had most of her net worth tied up in unvested RSUs and vested stock she hadn’t sold. When the company delayed its IPO due to market conditions, Tina realized she had no liquidity—and a huge amount of risk.
Lesson: Equity can be exciting, but relying too heavily on one company’s future is risky. Diversification is key, especially when your salary, bonuses, and equity are all tied to the same employer.
Whether you’re weighing whether to exercise early or deciding how much stock to sell, a personalized plan from a financial advisor like Schmidt FM can help turn your equity into a real financial foundation—not just a hypothetical payoff.
Equity comp can be one of the most powerful tools for building wealth—but only if it’s part of a clear, thoughtful plan. That means understanding how your RSUs or stock options work, how they’re taxed, and how they fit into your broader financial goals.
The good news? You don’t have to navigate it alone.
At Schmidt Financial Management, we help clients turn equity compensation into strategy. Whether you’re negotiating a new offer, planning a major sale, or just trying to avoid surprises at tax time, we’ll help you take control and make confident decisions at every stage.
📞 Let’s turn your stock grants into long-term financial confidence. Schedule a consultation with our team to get expert advice tailored to your career and goals.
Equity compensation is a form of non-cash pay that companies offer to employees, often in the form of stock options, restricted stock units (RSUs), or employee stock purchase plans (ESPPs). It allows employees to share in the company’s growth and success by owning part of the business. Equity compensation can help build long-term wealth but also comes with important tax, timing, and diversification considerations.
A common example is Restricted Stock Units (RSUs). Let’s say you receive a grant of 4,000 RSUs with a 4-year vesting schedule. Every year, 1,000 shares vest. Once vested, the value of those shares is treated as income, and you can choose to sell them or hold on to them. RSUs are especially popular at large public tech companies like Amazon or Meta.
Other examples include:
There’s no one-size-fits-all answer—it depends on your role, the company’s stage, and your risk tolerance. But here are a few guidelines:
💡 A financial advisor can help you evaluate an offer, model potential outcomes, and compare offers apples-to-apples—especially if equity is a big part of the package.
Yes, but how it’s taxed depends on the type:
📌 Because tax treatment varies, it’s important to plan ahead with both a financial advisor and a tax pro to avoid unexpected tax bills.
It depends on the type of equity and your vesting status:
📌 Review your grant agreements and talk to a financial advisor before leaving a job to avoid missing out on valuable equity or facing a surprise tax hit.
Yes—but timing matters. You may be able to:
However, relying too heavily on your company stock creates concentration risk. A financial advisor can help you diversify and make smart decisions that balance today’s needs with future goals.
It depends on your financial situation, risk tolerance, and goals. Some reasons to consider selling include:
On the other hand, you might choose to hold if you:
🧠 There’s no universal answer—but there is a smart strategy for you. A financial advisor with experience in tech equity can help you create a plan.