Models
Stress-test the decision before you sign, sell or vest.
Three models, each built around a question executives bring to the desk. Change an assumption and the output moves. Everything computes in your browser, and nothing you enter is sent to us.
Method
What these models do and do not do
They are simplified on purpose so the mechanism is visible. Unless a note says otherwise they ignore taxes, fees and your company's policies. They are education: not a forecast, and not advice.
- Concentration glide path: how fast a position could fall toward a target, and what a share-price drop would cost at each step.
- Deferred-compensation haircut: what an unsecured promise from your employer is worth once company risk is priced in.
- Change-in-control cliff: how the Section 280G excise tax switches on at three times your base amount.
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Model 1 of 3
Concentration glide path
How fast could a position fall toward a target, one trading window at a time, and what would a share-price drop cost at each step?
Sold per window
4.4% of net worth
Stress hit today
-19% of net worth
Stress hit at target
-7% of net worth
Simplified: prices stay flat between windows, proceeds are reinvested outside the stock, and taxes and trading costs are ignored. A 10b5-1 plan or your company’s policy may change how and when you can sell.
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Read: Managing Concentrated Stock Position Risk Without Signaling →
Model 2 of 3
Deferred-compensation haircut
What is an unsecured promise from your employer worth today once the chance the company stumbles is priced in?
Paid in full
89%
Risk haircut
8.6%
Value lost today
$128k
Deferred compensation is usually an unsecured promise from your employer, so it ranks with other unsecured creditors if the company fails. Illustrative arithmetic only; plan terms, funding vehicles and taxes vary.
Unsure how much of your deferred balance to rely on?
An advisor whose practice is executive wealth management can look at your plan's terms with you.
Read: Deferred Compensation Plans: Weighing the Real Tradeoffs →
Model 3 of 3
The change-in-control cliff
Where does the Section 280G excise tax switch on, and what does the line do to what you keep on either side of it?
Line (3× base)
$2.7M
Excise tax (20%)
$520k
You keep, before income tax
$2.98M
Above roughly 3.5× base ($3.15M), taking the full package leaves you with more than cutting it back to just under the line.
Simplified Section 280G: if payments reach three times the base amount, a 20% excise tax applies to everything above one times base, and the company loses its deduction. Income tax, valuation rules, exemptions, gross-up and cutback provisions in your agreement all matter and need a specialist. The dashed line is what you would receive with no excise tax.
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Read: Golden Parachute and Severance Tax Planning for Departing Executives →