What Should You Do With Your Employee Stock?

December 8, 2019
Whether it's stock options, restricted stock, an employee stock purchase plan, or some other form of equity compensation, most companies offer this vital benefit to employees. But once you have it, what should you do with it?

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  • You can always call Schwab and talk to a professional at 877-279-4476.
  • You can always call Schwab and talk to a professional at 877-279-4476.

Today, many startups and most of the companies on the Fortune 500 list allow their employees to take ownership in the company through stock awards, employee stock purchase plans, stock options, or some other form of equity compensation. That's a good thing because aligning the interests of employees and owners makes sense. But employees receiving equity compensation can feel overwhelmed. The details may seem like a confusing swarm of acronyms, tax challenges, and timing decisions that can obscure the benefits of a potential windfall.

In this episode Mark talks with Amy Reback, vice president of Schwab Stock Plan Services. They discuss how equity compensation has evolved and what strategies might be best for employees holding various types of stock options or restricted stock. Mark also dives into the biases that might be preventing you from making the best decisions about your equity compensation—and how you can guard against those mistakes.

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How Can You Maximize Your Employee Benefits?

Stock awards and 401(k)s can play a big role in a retirement strategy. But the role that our employers play in our financial lives is often much deeper.

When to Pay Taxes on Restricted Stock Awards

Restricted stock awards are typically taxed using their value on the vest date, but you can opt to use the value on the grant date instead. Here's what to consider before you perform a so-called Section 83(b) election.

Including Equity Compensation in a Financial Plan

Whether stock options or an outright stock grant, equity compensation can be complicated. Understand what you have and how it fits into your portfolio.

Related topics

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.

Diversification strategies do not ensure a profit and do not protect against losses in declining markets.

Schwab Stock Plan Services provides equity compensation plan services and other financial services to corporations and employees through Charles Schwab & Co., Inc. ("Schwab"). Schwab, a registered broker-dealer, offers brokerage and custody services to its customers.

This information does not constitute and is not intended to be a substitute for specific individualized tax, legal or investment planning advice. 

The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.

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