Phoebe, a PhD biosciences research executive, has recently relocated to the East Coast from her native Belgium, to assume the role of a lifetime. Now president of her division after 15 years with the Belgian branch, Phoebe is an insider, leading the team from the company’s global headquarters. She’s on a path to financial success she neither intended nor anticipated. Phoebe’s motivation has always been the work and not the financial rewards, yet one has led to the other during her tenure.
She began receiving annual Belgian Equity (BE) grants in 2013 while working abroad, for which she paid taxes at the time of grant. She expected not to pay Belgian tax on the stock appreciation from the grant date when she eventually sold.
Now in the US, her pursuit of a 10-year Green Card will threaten that assumption. She’s learned that 100% of the equity value of the BE grants she owns free and clear (and which predated her move to the states) will be subject to US taxes at the ordinary income rate upon exercising the grants once her Green Card becomes effective.
Having only been exposed to Belgian tax law and BE grants, she realizes there’s much to learn about the various forms of equity compensation in a global company, the impact of US tax law and the implications to her financial position. She is seeking the advice of a tax-aware financial planner who is knowledgeable about how stock-based compensation would impact her situation.
In her first meeting at SFG, she learned that, if she divested the BE grants prior to receipt of her green card, she could avoid US taxation. In the future, her planner would help her to evaluate three things:
- US tax treatment of all equity compensation
- Optimizing the timing of awards
- The economic value of the stock at any point in time.
Her SFG financial advisor also recommended a comprehensive financial plan that would help her to optimize her corporate and other financial assets without undue distraction from her new role.
*The name, likeness, and circumstances in this example are a fictional composite of facts from executives similar to actual SFG Clients.Tagged: executive compensation, sfg wealth planning services, chuck steege, personal financial planner, certified financial planner, performance shares, tax consultants, tax planning, executive compensation issues
Posted In: Executive Compensation, Incentive, Planning