Who: Early Stripe employee
Marital status: Recently Married
Equity type: Non-Qualified Stock Options (NSOs) and Restricted Stock Units (RSUs)
- Decide to sell, or not, in the upcoming tender offer, and understand the implications of either decision.
- Build out a financial plan focusing on near-term goals of buying their first home and starting a family, while also creating a financial roadmap for their long-term goal of retiring comfortably.
Advisor recommendations & actions taken:
- Sell 33% of Stripe stock in the tender offer.
- Prioritized RSUs in the tender offer due to tax implications (Stripe’s fundraise meant employee RSUs would vest and taxes would be due whether sold immediately or not).
- With the proceeds, they covered additional tax liability associated with her RSUs vesting and used the remaining amount to build up cash reserves and re-invest into a diversified investment account.
- Created a plan to exercise remaining NSOs the following year, when their annual income will be lower (due to the sale of RSUs), and to take advantage of the recent 409A decline (meaning the taxes at exercise will be lower).
- They will also take advantage of the fact that the NSOs were granted in California (higher tax state) but then moved to a lower tax state. They will need to pay the higher CA taxes when exercising, but will be able to pay the lower state taxes + federal long-term capital gains upon a sale.
- This approach reduces her concentration risks, allows her to retain additional upside, creates greater flexibility from a financial and employment perspective, and aligns with the objectives she has for her family. All benefits that are moving her closer to becoming financially independent.
- Following the immediate need to make a decision about the tender offer, Sam and her husband worked with their advisor and John Morrison, Head of Portfolio Management, to develop an ongoing financial plan that included investment management based on their long-term financial and family goals.
Sam has worked at Stripe for some time but never thought too much about her equity. She had a vague understanding of how it worked, but hadn’t really put too much thought into planning for it. All she knew is that it would likely be valuable someday.
Stripe typically conducted tender offers once a year — a company-sponsored program where employees could sell a portion of their equity back to the company (or investors) — but Sam didn’t really think about it until 2021 when the valuation shot up. And during the last tender offer the company held, she wavered on a decision
“Honestly, I went back and forth. I thought I wasn't going to do it, and then I did. And then I
logged onto Shareworks and I had actually missed the window,” she said. Now, she was prepared for when the next one would be announced.
In early 2023, Stripe made a major funding announcement with the main purpose of providing their employees with liquidity through a tender. Despite a drop in valuation, Sam was still interested, but she wanted to make the right decision. Unfortunately, when the announcement did come, she was out of the country on her honeymoon. But she didn’t want to miss another opportunity. At the very least, she wanted to make an informed decision.
She had heard of Secfi in the past, and had used some of the tools. When she got the email from Stripe about the tender offer, she decided to speak with an advisor at Secfi Wealth.
They had worked with financial advisors and CPAs in the past, but they were always left feeling like they were not getting the best service. “I'm still trying to figure out what NSOs stand for, what they are, and how they work And they're talking about all these other terms and details I'm thinking, ‘I don't quite get what's going on. But they seem to know what they're doing, so okay,’” Sam’s husband said. “It felt very transactional,” agreed Sam.
But meeting Chris Arnold, CFP, their Secfi Wealth advisor was different. “When we had our first call with Chris, I felt like he did a really good job of explaining and educating us about the whole process and what all of this meant,” her husband said. “I think that was what sold us on Secfi. Just how they kind of helped us understand what was going to be done with our money rather than just handle our money.”
“Chris just gave us a really good feeling and [it] felt like he really kind of approached it with a lot of empathy and heard us out,” Sam said. “He didn't pressure us in any particular way. He knew what questions to ask, sensed the level of struggle that we were at, then just guided us from there.”
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