Executive Compensation & Management
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At Momentum Wealth Management, we specialize in helping executives and business owners navigate their complex financial lives with precision and expertise. Our clients often face intricate financial landscapes that demand specialized attention. We streamline these complexities, allowing you to focus on what truly matters. As fiduciaries, we are legally obligated to prioritize your interests above our own. With decades of experience advising retirement plan sponsors, we bring a wealth of valuable insights to the table.
Momentum Wealth Management provides integrated financial advice to assist clients in making informed decisions regarding company-provided benefits, stock options, deferred compensation, dividends, and distributions.
Common Tools in Executive Compensation
Stock Appreciation Rights (SARs): These provide the right to benefit from the increase in the company's stock price, without having to purchase the stock outright.
Restricted Stock Units (RSUs): These are shares granted to an employee that vest over time, often used as a retention tool.
Incentive Stock Options (ISOs): These options offer favorable tax treatment if certain conditions, such as holding periods, are met.
Use of Life Insurance: Life insurance, particularly split-dollar life insurance plans, can be used as a sophisticated tool in executive compensation. Here, the employer and employee share the costs and benefits of the policy.
Golden Parachutes, Golden Handcuffs, and Poison Pills
Golden Parachute: These are compensation agreements providing significant benefits to executives if terminated after a change in control.
Golden Handcuffs: These incentives retain key executives by offering deferred compensation or stock options that vest over time.
Poison Pills: These are defensive strategies used by companies to prevent hostile takeovers by making the company less attractive to potential acquirers.
Strategic Methods to Hedge Concentrated Equity Positions
Executives with concentrated positions in their employer's stock can utilize various strategies to manage risk effectively:
Advanced Planning Techniques
Diversification: Investing in a variety of assets to spread risk and reduce exposure to any single investment.
Options Contracts
Hedging: Using options to protect against stock price fluctuations. For example, purchasing put options can provide downside protection.
Exchange Funds
Pooling Assets: By pooling their concentrated stock with those of other investors in an exchange fund, executives can diversify their holdings without immediate tax consequences.
Tax-Efficient Investing and Retirement Income Maximization
For highly compensated individuals, tax-efficient investing and retirement income maximization are crucial. Here are some strategies:
Tax Loss Harvesting: Selling securities at a loss to offset capital gains, thereby reducing overall tax liability.
Charitable Giving with Strategic Tax Planning: Combining charitable giving with strategic tax planning can provide significant tax deductions that offset income. For example, donating appreciated securities can avoid capital gains taxes and provide a deduction.
Qualified Charitable Distributions: Redirecting Required Minimum Distributions (RMDs) to a charitable cause can reduce taxable income.
Our team at Momentum Wealth Management is dedicated to providing comprehensive, sophisticated strategies tailored to the unique needs of high-net-worth executives. Let us help you navigate your complex financial landscape with confidence and precision.
Any reference to Tax or Legal:
The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.
Insurance:
Several factors will affect the cost and availability of life insurance, including age, health, and the type and amount of insurance purchased. Life insurance policies have expenses, including mortality and other charges. If a policy is surrendered prematurely, the policyholder also may pay surrender charges and have income tax implications. You should consider determining whether you are insurable before implementing a strategy involving life insurance. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.
191 Waukegan Road, Ste 350
Northfield, IL 60093
We take a comprehensive, long-term approach to wealth management that helps our clients meet their immediate needs. We create bespoke, lasting solutions for all of life’s financial milestones.
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