A Senior Executive retired after decades with one company and a net worth in excess of $17 million — 90% of his net worth was in company stock. The client:
- Wanted to reduce exposure to the company stock, but didn’t want to sell all his stock immediately as he was personally attached to the stock, and to the company.
- Tried to time his sales in an effort to maximize his return
- Was deeply concerned about the potential negative financial impact to his family if the stock price suffered a significant downturn.
- Had strong charitable inclinations.
- Held stock in retirement as well as after tax (brokerage) accounts.
- Dramatically reduce the concentrated position over a 2-3 year period.
- Minimize taxes, protect the downside from catastrophic loss, lower the volatility of his positions, and participate in the upside by utilizing option strategies – writing covered calls and buying puts.
- Utilize a net unrealized appreciation (NUA) strategy.
- Meet the charitable intent while protecting the financial desires of the client.
- The plan was fully executed and achieved in only 18 months reducing his concentrated position from $14 million to less than $3.7 million and his other stock positions from 90% of his net worth down to 25%.
- Client retained a substantial amount of company stock (this was personally important) that was well in excess of what was needed to meet his goals.
- Implemented a gifting strategy that saved $40,000 for every $100,000 in charitable gifts.
- The sell discipline strategy netted a material premium versus had he sold all stock immediately.
- The proceeds from the concentrated position were used to build a diversified portfolio, giving him and his family peace of mind.