Broker Check

I Feel It Coming...

| March 28, 2017
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Hello Hello!! Spring has sprung the grass has “riz”, I wonder where my RSUs and Stock Options is. Hard to believe, especially for our friends here in New England! As I pen this blog on March 22, the Weather Channel app on my Droid Turbo 2 tells me that it feels like its 14° outside and that spring is here!

Nonetheless, it is that time of year for our friends that work at publicly traded companies to get their annual RSU (Restricted Stock Unit) and incentive Stock Option awards…coinciding with this year’s lapse/vesting of said prior year’s awards and often in addition to last year’s cash bonus. So aside from pining for a little bit of sunshine...ain’t no sunshine when she’s gone…the question is what to do with this treasure trove of executive compensation?? As these have an impact on income taxes…investment asset allocation…cash flow…your life!..etc. And often doing nothing, as now is just too busy, has many unintended consequences. And while I’m all for the religious approach.. pray that things work out .. I’m always worried that those prayers just won’t get answered! So, what is your strategy? Company is doing well…I’m doing well…stock is on the rise or is poised to “break-out”. Right!!!??..I’ll just hold onto everything and sell/diversify later at higher prices!...as American as baseball, hot dogs, apple pie and _____(name of your company)..And holding onto the company stock shows I’m a good team player! Right?!?? And I’ve got to get my tax returns filed by April 18 th - along with a quandary of spring cleaning, beginning of High School lacrosse season, and the usual personal-financial- life stuff that is always going on! Well…not so fast! Things might go better if you had an RSU lapse and “Diversify” plan in place…a predetermined Good-‘til- canceled (a price above the option price that if is not already there, automatically sells if it hits) strategy for your vested stock options with a subsequent plan for the proceeds. What about keeping track of “black out” periods…hate those!...tax implications- as in many cases all of this stuff has gone thru payroll…double hate taxes!.....and ultimately coordinating this with your overall financial deal! Do the financial professionals in your life, if there are any, know or even care about what is going on in this regard in “real” time? Or is this another thing that will be gotten to when there is more time?

As I wrap up this rant, at colder temperatures, than when I started, really??…a guiding principle we have at WMGNA on this and many related matters is “can we get our arms around the downside”? You find out more about yourself-others- companies we work for when things are not going well…when your #*@! is weak! If your company is suffering and the stock value is going down what happens not just to the RSU/Stock Options that you’ve been holding that got wiped, but also your salary? Your next contract if that’s how you’re working? Bonus, benefits, and ultimately your J-O- B?! That’s some serious getting your arms around the downside. While that is unlikely, we have seen some significant stock price gyrations in the 22 years we have been advising folks at publicly traded companies. And even seen a bankruptcy! Hopefully we sell/diversify company stock award/options and right after we do so, the stock goes up- just as a rising tide lifts all boats!! Now all we need are some rising temperatures!!

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