- ORIGINAL NEWS
You could ‘miss the opportunity’ with company stock, experts say. Here are the key things to know
- SUMMARY
Many companies offer stock compensation to employees, giving them a stake in the company’s ownership.
Around 72% of companies provide such benefits, including stock options, restricted stock units (RSUs), and employee stock purchase plans (ESPPs).
Stock options come with a preset price for buying company shares within a specific time frame.
If the market value of the stock exceeds the preset price, exercising the option can be profitable.
However,税can be complex, particularly for incentive stock options.
RSUs are company shares granted to employees upon hiring, vesting over time.
They can be tied to performance goals and are usually taxed when vested.
The decision to sell or hold RSUs depends on individual investment strategies.
ESPPs allow employees to purchase discounted company shares through payroll deductions.
The most favorable plans offer a 15% discount, but participation depends on financial goals.
There is no guarantee of profit, even with the discount.
Many employees miss opportunities to build wealth with stock compensation due to a lack of understanding.
It’s essential to consult financial professionals, thoroughly comprehend the terms and tax implications, and align investments with long-term goals.
- NEWS SENTIMENT CHECK
- Overall sentiment:
positive
Positive
“Nearly three-quarters of companies offer some form of equity compensation to certain employees, according to a 2023 survey.”
“Some 72% of companies offer some form of equity compensation to certain employees, a 2023 survey from Morgan Stanley found.”
Negative
“However, some “miss the opportunity” because they don’t understand it, said certified financial planner Chelsea Ransom-Cooper, chief financial planning officer for Zenith Wealth Partners in New York.”
“Stock options become valuable when there’s a discount between your preset price and the market value, which makes it more attractive to exercise. However, the taxes can be complicated, depending on the type of stock options.”