What to review before a vest, exercise or sale
Equity events often happen on a schedule set by your employer, which makes them easy to prepare for. This checklist covers what people commonly review a few weeks before a vest, an option exercise or a sale.
Confirm the facts
Which grant, how many shares, the date, and the type of event. For options, confirm exercise price and expiration. For sales, confirm which lots would be sold and their basis.
Estimate the tax effect
How much income or gain the event creates, how much will be withheld, and whether estimated payments are needed. For ISOs, whether AMT could apply, and for sales, whether the gain is short-term or long-term.
Check cash and restrictions
Cash needed to exercise or to pay taxes, plus any trading windows or blackout periods. Knowing these ahead of time avoids rushed decisions and last-minute transfers to cover a tax payment.
What to gather
- Event date and share count
- Estimated income and withholding
- Cash needed and where it comes from
- Trading windows and restrictions
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Frequently asked questions
How far ahead should I prepare?
Many people start a few weeks before, which leaves time to confirm details with a CPA and check trading windows.
Is this equity compensation guide advice?
No. Sam's List writes these guides for education. They describe common questions and processes, not advice for your specific situation.
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