For tech employees, it’s open season. It’s a time when you can sell your company shares. You are not restricted from doing so. There are different open season windows for each company so please consult the internal resources at your firm to get the specific dates.
Open Season is an Exciting Time
The most exciting part of open season is that you are free to buy or sell your stock. There is also a third option – do nothing. Often, the third option is a default choice of many employees.
There are 3 different scenarios for doing nothing.
Forgetful Employees
First, many employees are forgetful. Open season comes and goes and this group doesn’t pay attention to their vested shares. Without the proper awareness, this could cost you a lot of money!
Share Price Scrutinizers
Second, some employees may be holding onto shares because they are not sure what’s going to happen to the company or the share price. They are hoping for a huge windfall.
If you fall into this category, how many times are you nervously checking the stock price throughout your work day and doing some mental math about the value of the shares?
RSUs Below Vesting Price
Finally, some individuals own RSUs below their vesting price. As the share price of your company fluctuates, the current share price of your employee stock can be below the vesting price.
Employees can sometimes be fixated on the share price increasing beyond the vesting price before they sell during open season. This can be dangerous.
Sometimes shares never regain their vesting prices. Don’t let the share price wag the tail of the stock ownership dog.
If this is the case, you can sell your RSUs to reduce your taxes, up to a certain amount.
The Solution during Open Season
Going forward it’s best to have an open season strategy for your shares and RSUs as they vest every quarter or month – depending on your situation.
Your plan can be implemented with the following, simple question:
If you had 10 G’s of cash lying around would you buy your company stock?
If yes, then hold onto your shares.
If no, which is typically the more likely answer, then sell them!
In fact, it’s best to have a plan in place to sell your stock long before it vests. The benefits to you are a clear blueprint to help you get what you want – a house, college education for the kids, or any other way you use your hard-earned money to serve you.
If you’re curious about share ownership during open season and how you can benefit, feel free to set up a consultation.