Employees with concentrated stock positions often ask:
- How much company stock is too much?
- How do I protect what I’ve built?
- How can I reduce risk without creating a large tax bill?
- Am I making the most of my equity compensation?
- Am I truly on track for retirement?
These questions rarely have simple answers. The right strategy depends on your goals, taxes, timeline, and overall financial picture.
Equity Compensation Can Build Meaningful Wealth, Alongside Hidden Risk
If you have worked for a successful public company for several years, chances are you’ve accumulated more than a paycheck. RSUs, stock options, ESPP shares, and company stock in your retirement plan may have created significant wealth.
What you may not realize is that these same opportunities can leave a large portion of your net worth tied to a single company. The question is not whether your company’s stock has been a good investment. The question is whether too much of your financial future depends on it.
You May Be More Concentrated Than You Think
Company stock often accumulates in multiple places:
- RSUs and PSUs
- Stock options
- Employee Stock Purchase Plans (ESPPs)
- Company stock held in a 401(k)
- Legacy stock positions, founder shares, or inherited stock
Individually, these holdings can seem manageable. Combined, they can represent a significant concentration risk.
Why Diversification Matters
A concentrated stock position can create opportunities, as well as risk.
Even strong companies experience periods of volatility. When a significant portion of your wealth is tied to one stock, a single company’s performance can have an outsized impact on your family’s financial future.
That is why many investors eventually explore ways to diversify while balancing taxes, timing, and long-term goals.
Strategies to Consider
Depending on your situation, potential solutions may include:
- Gradually diversifying through a planned selling strategy
- Implementing a 10b5-1 trading plan
- Exploring exchange funds
- Taking advantage of Net Unrealized Appreciation (NUA) opportunities
- Using charitable gifting strategies
- Coordinating decisions across RSUs, options, ESPPs, and retirement assets
The best solution is rarely one strategy in isolation. Often, the biggest opportunity comes from coordinating all your equity compensation and investment decisions as part of a single plan.
Start the Conversation
For more than 50 years, Becker Capital Management has helped families navigate complex financial decisions. If company stock represents a meaningful portion of your wealth, now may be a good time to evaluate whether your portfolio still reflects your goals, risk tolerance, and long-term objectives.
Get in touch with us today.
Prefer to reach out directly? Contact Jake Williams at jwilliams@beckercap.com.
Investing in securities involves the risk of loss. Past performance is not indicative of future results. The opinions expressed herein are subject to change at any time without notice.