Plan your equity comp before the decisions compound.
Your equity comp is a tax decision — putting it off can make it worse.
RSUs, options, an ESPP — whichever you hold, expensive mistakes are often made when no plan is in place. We help you think through the whole picture: the taxes, the timing, and what you’re actually working toward.
// THE PROBLEM
Equity compensation is pay delivered as company stock instead of cash — restricted stock units (RSUs), stock options (ISOs and NQSOs), and employee stock purchase plans (ESPPs). Each one vests or comes due on its own schedule, with its own tax treatment. Handle them one at a time and the small choices compound — and not handling them at all is its own choice, with its own cost.
Each vesting event, decided on its own.
Each sale, a quick fire drill.
And the default — doing nothing — quietly made for you, year after year.
// WHAT YOU HOLD
Most people hold one or two of these, not the whole set. Find yours below. Each has different tax considerations.
// Most common
RSUs — restricted stock units
RSUs vest as ordinary income at the market price on the vesting date — whether or not you sell a single share.
Most employers withhold at the flat 22% supplemental rate. If your marginal rate is higher — and for big-tech comp it usually is — the gap lands as a bill at filing.
What we model: sell-to-cover vs. cash, a 10b5-1 sell schedule, and closing the withholding gap before April.
// Options
ISOs — incentive stock options
ISOs let you buy company stock at a fixed price, and may receive long-term capital-gains treatment if you meet the holding rules.
Exercising can trigger the alternative minimum tax (AMT) on a paper gain — a bill on income you haven’t pocketed.
We'll help model the AMT crossover point and determine whether exercising in tranches makes more sense,.
// Options
NQSOs — non-qualified stock options
NQSOs are taxed as ordinary income on the spread between your strike price and the market price at exercise.
Wait too long and you can owe tax on a spread that later evaporates — or miss the expiration outright.
What we model: exercise timing against your bracket, and spreading exercises across tax years.
// Purchase plan
ESPP — employee stock purchase plan
An ESPP lets you buy company stock at a discount, often with a lookback to a lower earlier price.
Sell too early and a qualifying disposition (mostly long-term gains) flips to a disqualifying one (mostly ordinary income).
The fix: the qualifying-disposition holding dates, the $25k annual cap, and sell-now vs. hold.
// Election
83(b) elections
An 83(b) election lets you pay tax on certain equity now, at today’s lower value, instead of later as it vests.
30 days from grant, no extensions. Miss it and the election is gone.
When it’s worth it: depends on your stage and the spread — and for early-stage equity it can start the QSBS clock. We run the math before the window closes.
// The cost of going it alone
The costliest equity-comp mistakes rarely feel like mistakes at the time. They’re defaults: the box you didn’t check, the window you let pass, the shares you simply kept.
Under-withholding. Default RSU withholding may not cover your real rate — the shortfall shows up in April.
AMT by surprise. Exercising ISOs without modeling the alternative minimum tax can create a bill on gains you haven’t realized.
The wrong ESPP sale. A sale a few weeks early can turn long-term gains into ordinary income.
Exercising into a falling stock. Acting on the calendar instead of the picture can leave you taxed on a spread that’s already gone.
Accidental concentration. Holding every vested RSU is a decision — usually an unspoken one — to bet more and more of your net worth on a single stock.
// Illustrative only
RSUs vesting this year
$200,000
Default supplemental withholding
22%
Assumed marginal rate
32%
Not withheld — due at filing
≈ $20,000
Round, illustrative figures to show the shape of the gap — not a projection of your situation.
// WHAT ACTUALLY MATTERS
The instrument is the easy part. The timing, the taxes, and whether you act at all — that’s where it adds up or leaks away.
// Beyond the grant
It doesn’t stop at the grant
Equity decisions ripple into the rest of your financial life. Two connections matter most for tech professionals.
Deferred compensation (NQDC)
If your company offers a non-qualified deferred comp plan, it’s another lever for timing income — and another decision that shouldn’t be made in isolation from your equity and tax picture.
A concentration you didn’t choose
Hold enough vested RSUs and one stock can quietly dominate your net worth. Diversifying it without a large tax bill is its own discipline — and we cover it in depth.
Pre-IPO / early stage
At a pre-IPO company, a few things change: 83(b) timing gets sharper, qualified small business stock (QSBS) may offer a meaningful exclusion, and the $100k ISO limit starts to matter.
// How we think about it
Built by people who’ve
lived it
Prospero’s advisors are former tech professionals who have personally held and managed equity comp like RSUs, ISOs, NQSOs, and ESPPs.
We’ve sat where you’re sitting — weighing an exercise under uncertainty, watching a vesting cliff approach. That’s pattern recognition you don’t get from a textbook.
Every company’s plan is different — vesting schedules, blackout windows, liquidity terms — so the strategy has to fit the specifics, not a template.
01
Full picture — map everything you hold
Your equity across every grant and type, alongside your tax situation, portfolio, risk tolerance, and goals.
02
Multi-year plan — sequence across tax years
Order exercises and sales to manage brackets, spread AMT, and time around vesting ladders — so a single-year view doesn’t cost you in years two and three.
03
Ongoing coordination — adjust as life changes
Revisit as your comp evolves, markets move, and goals shift — so the plan stays current, not stale.
// NEXT STEP
Tell us more about your situation.
We can talk through the equity you’re holding and the decisions on your mind, and see whether we’re the right fit.
// Questions
Frequently asked questions
What is equity compensation?
Equity compensation is pay delivered as company stock rather than cash. The most common forms are restricted stock units (RSUs), stock options (incentive stock options / ISOs and non-qualified stock options / NQSOs), and employee stock purchase plans (ESPPs). Each carries its own tax treatment and timing.
How are RSUs taxed?
RSUs are generally taxed as ordinary income at the market value on the vesting date, whether or not you sell. Employer withholding may use the 22% supplemental rate, which in some cases falls short of your actual marginal rate — leaving a gap to plan for at filing.
What’s the difference between ISOs and NQSOs?
NQSOs are taxed as ordinary income on the spread between strike and market price at exercise. ISOs may qualify for long-term capital-gains treatment if holding requirements are met, but exercising them can trigger the alternative minimum tax (AMT). Which approach fits depends on your situation.
Do I need a financial advisor for equity compensation?
Not necessarily for any single decision. Equity comp tends to get costly when choices are made in isolation from taxes, timing, and broader goals. An advisor who works with equity compensation regularly may help you see the connections and avoid mistakes that are hard to undo.
Should I sell my vested RSUs or hold them?
It depends on your tax situation, how concentrated your net worth already is in one stock, and your goals. Holding every vested share is itself a decision to increase that concentration; in some cases a planned selling schedule may help reduce single-stock risk. This is educational, not individualized advice — consider your own circumstances or speak with an advisor.
