When company stock or stock options become a potential problem, you can turn to J.P. Morgan Private Bank for ideas.
Yael* was a successful C-suite executive in her late 40s. She worked at a profitable, publicly traded pharmaceutical company where she had been an employee for 16 years. Now in her prime earning years, Yael wanted to maximize her compensation with several goals in mind: Structure her wealth as efficiently as possible. Fund a comfortable retirement for her husband and herself. And provide for their children’s trusts.
Like many corporate executives, the majority of Yael’s portfolio value was made up of shares in the company she worked for. Over the years, Yael had received stock as part her compensation. Now those shares had considerably appreciated, and she was earning a tidy income from the dividends.
But she knew there were a number of risks associated with her concentrated position. A drop in the price of her company’s stock could affect her overall net worth significantly.
The obvious step would be to diversify her portfolio by selling her shares, but this was not an option: Not only was Yael restricted to “open window periods” for selling, but she was also required to keep a portion of her stock in order to meet minimum holding requirements. To complicate matters further, some of Yael’s shares had not yet vested.
Even without these constraints, an immediate sale could result in a significant capital gains tax, given her stock’s appreciation.
Yael spoke to J.P. Morgan Private Bank’s advisors, who set to work developing a customized investment strategy backed by sophisticated modeling and proprietary research.
Our multi-step approach included:
*Names and details have been changed to protect our clients’ identities. Information is not a guarantee of future results.
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