How can I optimize all this stock?

[l2ridehd]

I also had the exact same situation. Part of your problem is that you have to document a plan of when you sell as I did. So you can't mange market up's and down's with your plan. You could look at the stock history and determine if there are patterns. My recommendation is build your plan to sell a minimum of 50% over the next 6 months, then another 10% of the balance every 3 months going forward. Lock in the gains and diversify. You have all your eggs in a single basket. Forget the taxes, just get yourself to a more flexible position. Take the cash, lock in the profits, move it to simple low cost index funds and remove the risk of a large portfolio in one place. If you retain any, keep the RSU shares.

 

[Symbiotic]

What about NEW options I would bet that you are getting new ones (including the whole alphabet soup) of options each year as that is usually how companies handle bonus etc...

Yep, good catch. I expect to probably receive a significant new grant this year and in ensuing years. Although those vest over many years, they will gradually work to increase my long position in the company. And so they do argue for selling more, now.

 

[Symbiotic]

Take the cash, lock in the profits, move it to simple low cost index funds and remove the risk of a large portfolio in one place.

Agreed, this makes sense. It was what I was assuming I should do. I am still looking for the magic incantation that somehow saves me hundreds of thousands of extra dollars, though.

 

[SecondCor521]

Yep, good catch. I expect to probably receive a significant new grant this year and in ensuing years. Although those vest over many years, they will gradually work to increase my long position in the company. And so they do argue for selling more, now.

If you may be leaving in a couple of years, the new options may expire when you leave the company or shortly thereafter, as I'm sure you well know.

2Cor521

 

[Symbiotic]

If you may be leaving in a couple of years, the new options may expire when you leave the company or shortly thereafter, as I'm sure you well know.

Yeah, this is another interesting facet. Pretty much no matter when I leave, there will be a stream of unvested options sitting out there in the future that I will leave on the table. I guess that is why they call them "golden handcuffs."

The fact is, there will come a point where the marginal utility of the remaining stream has diminished greatly. My guess is that happens between 3 and 4.5M net worth for us, but the fact is that the stock gains are likely to be so volatile that it is not worth much time spent trying to calculate it now. In some sense, I feel like I just have to ride the rollercoaster and see where it takes me.

 

[Rambler]

I'll just add it again...diversify. Don't let greed get the best of you. I did...I also had 100,000 options in my company, exercised 70,000 of them over time, thus cashing out a good portion of them. I actually had a schedule to sell them off, but when the stock price started dropping after June 2007, I got greedy and held off exercising on my schedule (they were all vested at that time) due to the decline in stock price. Our company is in a segment that tends to lead market declines and often leads market recoveries, so we were going down even while the market was peaking that October.

Bottom line, the stock never recovered to June 2007 levels, and is still below the 2002 strike price. The options expired in 2009, and I missed out on about $2m due to my foolish greed and expectation of recovery. I'm a pretty smart guy, but with this one I was REALLY foolish.

We no longer issue options, and we now have a restricted stock plan instead. I am expected to be a shareholder, so I do keep some, but I now sell most of it and diversify with each vesting.

R

 

[l2ridehd]

Agreed, this makes sense. It was what I was assuming I should do. I am still looking for the magic incantation that somehow saves me hundreds of thousands of extra dollars, though.

Unfortunately there is no magic. If you allow greed to cloud your judgement it will end up costing you money. Take the profits and diversify sooner vs later. I had 126000 options and I had in my plan for April 2011 to dump 100000 of them. I did and paid off the mortgage for my retirement home. When we announced earnings in June the stock dropped by almost 50%. My only regret was not dumping them all. I retired March 31, 2012. The 26000 plus another 8000 all vested the day I retired and I have 5 years to act on them. However today those 34000 options are worth almost nothing. I hope they recover before they expire, but I have my doubts. Take the money off the table. As long as your company and job are solid, you will get more. Pay the taxes and be happy you can.

 

[Texas Proud]

If you may be leaving in a couple of years, the new options may expire when you leave the company or shortly thereafter, as I'm sure you well know.

2Cor521

Yeah, this is another interesting facet. Pretty much no matter when I leave, there will be a stream of unvested options sitting out there in the future that I will leave on the table. I guess that is why they call them "golden handcuffs."

The fact is, there will come a point where the marginal utility of the remaining stream has diminished greatly. My guess is that happens between 3 and 4.5M net worth for us, but the fact is that the stock gains are likely to be so volatile that it is not worth much time spent trying to calculate it now. In some sense, I feel like I just have to ride the rollercoaster and see where it takes me.

I would check this.... at my old mega, if you retired you still got to keep them...

wish I had some of the numbers that are being bandied around.... but not the case....

 

[Animorph]

A change of control in the company, like being bought by another company, usually triggers full vesting. So that's something you might watch for.