Episode 54: RSU Strategies for Tech Professionals with Landon Loveall

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Landon Loveall is a certified financial planner and dedicated advocate for tech professionals to increase their wealth through financial, tax and stock option planning. He is a partner of KB Financial Advisors which has been specializing in maximizing stock options for tech employees since 2014.

Landon regularly shares his thought leadership on the KB Financial Advisors blog about the unique scenarios presented by employee stock options. When he's not assisting clients, Landon enjoys kayaking down the Duck River with his wife Melissa and their three children in Columbia, TN.

Connect with Landon

• https://kbfinancialadvisors.com/
• https://www.linkedin.com/in/landonloveall/

In order to maximize the value of RSUs over time, it is important to understand the vesting schedule and how the shares become taxable. Typically, RSUs have a time-based vesting schedule, where a certain percentage of shares vest each year over a four-year period. The key events to pay attention to are the vesting date, when the shares become yours, and the settlement date, when the shares are transferred into your ownership and become taxable.

Before an IPO, RSUs may have a double trigger, where the shares vest based on time and an event trigger, such as the company going public. After an IPO, vesting and settlement typically occur at the same time. It is important to be aware of the tax implications of RSUs, as the value of the shares becomes taxable at the settlement date.

In this episode, we talk about:

• Understanding RSU Vesting Schedules: Landon emphasized the importance of not just focusing on the volume of stock you receive but also paying close attention to the vesting schedule. The vesting schedule and what you receive over time are critical aspects that can impact your financial planning significantly. Knowing when your RSUs vest and how they become taxable is crucial for maximizing your returns on time and talent.
• Pre-IPO RSUs vs. ISOs: We discussed the differences between pre-IPO RSUs and ISOs, shedding light on the tax implications and risks associated with each type of equity compensation. Landon highlighted the complexities of incentive stock options and the importance of understanding the tax implications, especially around an IPO event.
• Pay Stub Analysis for RSUs: Landon shared valuable insights on how tech professionals should analyze their pay stubs when it comes to equity compensation. Understanding supplemental withholding rates, federal and state taxes, and the implications of RSU settlements on tax liabilities is crucial for effective financial planning and tax management.

Episode Timeline:

• 00:00:00 - Introduction to Equity Compensation
• 00:01:02 - Guest Introduction: Landon Lovell
• 00:02:06 - Understanding RSUs and Their History
• 00:03:26 - Tax Implications of RSUs
• 00:05:20 - RSUs in Public Companies
• 00:06:55 - Options for Handling RSUs at Vesting
• 00:09:01 - Variations in RSU Packages
• 00:11:31 - Negotiating Equity Compensation
• 00:13:07 - Immediate and Front-Loaded Vesting Trends
• 00:15:05 - Importance of Equity Compensation Strategy
• 00:17:00 - Risks and Rewards of Equity Compensation
• 00:18:04 - Personal Strategy for Managing Equity
• 00:19:12 - Transition from ISOs to RSUs in Private Companies
• 00:22:04 - Pre-IPO RSUs and Tax Considerations
• 00:24:31 - Understanding Pre-IPO Share Values
• 00:29:17 - Pay Stub and Tax Implications for Equity Compensation
• 00:34:23 - Conclusion and Further Resources