Executive Compensation
Understanding Executive Compensation
As a high-level professional, you likely have some form of executive compensation package in addition to your salary that is tied to long-term performance goals and is negotiated with your employer. Understanding the differences and knowing how to manage your income to align with your goals is crucial, and it can help you manage future negotiations to fit your needs.
Deferred Compensation plans withhold part of your wages, usually until retirement; in addition to the tax benefits, they can possibly increase capital gains over time. It’s important to evaluate your distributions by tax and cash flow needs before you make any withdrawals.
Short-term Incentives (STI) are formula-driven awards provided over a period that’s typically a year or less. Some types are similar to but not quite bonuses (when the amount awarded isn’t discretionary), while other types include discretionary bonus plans and profit-sharing plans.
Long-term Incentives (LTI) are similar to STIs but are intended to motivate results over the course of a longer period than one year. They’re usually comprised of a mixture of equity and non-equity compensation, like stock options, performance shares, restricted stock, and cash.
A Severance Package defines the financial terms under which you’ll leave the company and can help ensure you have the cash flow and benefits (like insurance) you need during a transition period. You can even ask for job training or job-search assistance to be included in your severance package. You’ll want to consider whether or not your lump-sum severance pay will bump you into a higher tax bracket, and if it will, ask if the payment can be distributed over two years.
Unique Solutions for Executives
Managing executive compensation often involves complex financial planning, including structuring distributions, navigating tax implications, planning for disability and life insurance in order to preserve assets, and creating a plan to manage multiple income sources cohesively. It’s a financial situation that desperately needs balance at the helm.
At Balanced Wealth Group, we understand your unique financial needs, and we have years of experience helping high-level professionals like you create a plan that helps put your income to work for you. We listen to your goals and needs, investigate every inch of your finances, and help you strategize to make the most of your income to meet your needs today and save for your goals tomorrow and beyond. We’ll help you create a budget to save for goals like family vacations, house projects, saving for college, and paying off the car while helping you plan your retirement and legacy and create a charitable giving strategy.
No area of your finances is isolated, so we’ll also help you make the most of your stock options and tax planning so that the income you have goes where you want it to go. Through regular meetings and in-depth analysis of your progress, we’ll help you monitor your goals and stay on track. Financial freedom starts with a balanced approach to saving, investing, and spending on what brings you joy. We’ll help you get there.
Balance More than Your Checkbook
Our mission is to empower you to find balance in every of life, not just your finances. We believe that cultivating healthy financial habits, sticking with them, and diligent saving are all critical to a healthy financial plan, and having a healthy financial plan in place is the key to living a life free from worry about the future. We want to help you fund your dreams and find the freedom to enjoy the fruits of your labor. That’s why we provide a range of services designed to empower positive action in your financial life. We’ll always prioritize listening to your needs and doing what’s best for you– not just your bottom line. Learn more here.
