Executive Compensation
Equity Concentration: The Wealth Risk Most Executives Ignore
When a significant portion of your net worth is tied to a single company's stock, the risk isn't academic — it's personal.
Your employer already owns your income
If you are a senior executive, your paycheck, your bonus, your deferred compensation, and often the majority of your investable assets all depend on the same enterprise. That is not diversification with a tilt. That is one bet, sized to your entire life.
Most executives know this. Very few have a written plan for it, because unwinding concentration touches taxes, optics, blackout windows, and loyalty all at once.
Four questions that expose the exposure
- What percentage of my net worth sits in one ticker? Include RSUs not yet vested and options not yet exercised.
- What would a 40% drawdown do to my retirement date? If the answer changes the date, the position is oversized.
- What is my tax cost to reduce it — and over how many years can I spread that cost?
- What do my equity documents actually say? Vesting schedules, expiration dates, and post-termination windows quietly create deadlines.
Complexity is not a reason to wait
Executive compensation is where I most often see smart people freeze. The plan documents are dense, the tax consequences are real, and there is always a reason this quarter is the wrong quarter.
A workable approach usually looks unglamorous: a multi-year sell-down schedule, pre-committed and automated; charitable gifting of appreciated shares where generosity is already intended; and a clear rule for what happens with each new vest before it lands.
The handoff problem
Even a good plan fails at the handoff. "Go talk to your CPA about that" is where most equity strategies die. The strategies that get executed are the ones where someone owns the coordination and follows up until the action is complete.
Concentration is a decision. Left unexamined, it is a decision made by default.