Equity Compensation Strategies

ISOs, NQSOs, RSUs, ESPPs, and concentrated positions — tax-aware strategies designed to maximize the value of every share you earn.

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Why It Matters

Equity comp can be your single biggest wealth-building tool — or your biggest tax mistake.

Companies use stock-based incentives to align employees with long-term performance, but the rules around ISOs, NQSOs, and RSUs are dramatically different — and so is the tax bill. We help you understand exactly what you've been granted, when to exercise, when to sell, and how to fold the proceeds into a coordinated wealth plan.

Whether you're an early employee at a high-growth company, a public-company executive receiving annual RSU grants, or a founder navigating a liquidity event, we build a strategy around your specific grants, vesting schedules, and goals.

The Three Most Common Awards

ISOs, NQSOs & RSUs

Three forms of equity compensation that share the same goal — ownership — but differ significantly in structure, eligibility, and taxation.

ISO

Incentive Stock Options

Granted exclusively to employees, ISOs give the right to purchase company stock at a predetermined exercise price. They offer favorable tax treatment when holding rules are met, but are subject to strict IRS limits and potential Alternative Minimum Tax (AMT) exposure at exercise.

Employees only; $100,000 annual exercisable limit
Bargain element may trigger AMT at exercise
Long-term capital gains treatment if held 2 years from grant / 1 year from exercise
Disqualifying dispositions taxed as ordinary income

NQSO

Non-Qualified Stock Options

More flexible than ISOs — NQSOs can be granted to employees, contractors, consultants, and board members. They lack the special tax benefits of ISOs and create immediate ordinary income on the bargain element at exercise, plus payroll taxes.

Available to employees, contractors, and directors
Bargain element taxed as ordinary income at exercise
Subject to payroll taxes (Social Security, Medicare)
Capital gains treatment on appreciation after exercise

RSU

Restricted Stock Units

Not options — RSUs are a promise to deliver shares (or cash) after vesting conditions are met. They guarantee value once vested but the full market value is taxed as ordinary income at vesting, often with shares withheld to cover taxes.

No exercise price — shares delivered at vesting
Full FMV taxed as ordinary income at vest
Employer typically withholds shares for taxes
Capital gains on appreciation after vesting

Key Structural Differences

A side-by-side view of how each award type is structured and taxed.

Feature	ISOs	NQSOs	RSUs
Type	Stock option	Stock option	Stock award
Who Can Receive	Employees only	Employees, contractors, directors	Typically employees
Exercise Price	Yes, set at grant	Yes, set at grant	None
Ownership	After exercise	After exercise	After vesting
Expiration	Yes (e.g., 10 years)	Yes (e.g., 10 years)	Vests into shares
Tax at Exercise / Vest	AMT only	Ordinary income	Ordinary income
Tax at Sale	Long-term capital gains*	Capital gains on appreciation	Capital gains on appreciation

*ISO long-term capital gains treatment requires holding stock at least 2 years from grant and 1 year from exercise. Otherwise treated as a disqualifying disposition.

Worked Example

The Tax Impact, Side by Side

Assume 100 shares granted at $50, exercised/vested at $80 in Year 1, and sold at $100 in Year 2. Employee is in the 32% income tax bracket; long-term capital gains at 15%.

ISO Scenario

$750 total tax

Year 1: Exercise at $80. $3,000 bargain element → AMT only.
Year 2: Sell at $100. $5,000 gain × 15% LTCG = $750.

NQSO Scenario

$1,260 total tax

Year 1: Exercise at $80. $3,000 × 32% = $960 (plus payroll).
Year 2: Sell at $100. $2,000 × 15% LTCG = $300.

RSU Scenario

$2,860 total tax

Year 1: Vest at $80. $8,000 × 32% = $2,560 ordinary income.
Year 2: Sell at $100. $2,000 × 15% LTCG = $300.

Same economic outcome, dramatically different tax results — which is why the strategy wrapped around your equity matters as much as the equity itself.

How We Help

We build a coordinated plan around your grants — integrating exercise, sale, tax, and diversification decisions into your broader wealth strategy.

AMT Planning for ISOs

Model the AMT impact of ISO exercises across multiple years to identify the optimal exercise window and avoid surprise tax bills.

Exercise & Sell Timing

Coordinate exercise dates and sale timing to qualify for long-term capital gains, balance cash needs, and manage concentrated-stock risk.

Concentrated Position Risk

Build a diversification plan for large single-stock positions using staged sales, exchange funds, hedging, and charitable strategies.

RSU Vesting Strategy

Plan for ordinary income spikes at vest, evaluate share withholding, and integrate proceeds into your broader portfolio and tax plan.

ESPP Optimization

Maximize the value of qualified and non-qualified Employee Stock Purchase Plans while managing disposition rules and tax impact.

83(b) Elections

For founders and early employees receiving restricted stock, evaluate and file timely 83(b) elections to lock in low-basis ordinary income and start the long-term capital gains clock at grant.

Disclosure: This content is for informational and educational purposes only and should not be interpreted as financial, legal, or tax advice. Investment decisions should be based on individual circumstances, and we recommend consulting a qualified professional before implementing any financial, legal, or tax strategies.

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