S2 EP13 - Understanding Company Stock Options

We break down RSUs, PSUs, and ESPP stock compensation so you understand what you own, when taxes hit, and what choices you actually control. We also share a practical framework for deciding when to sell, when to hold, and how to avoid getting overexposed to your employer’s stock. 

 

• How RSUs and PSUs work and why companies grant them 
• Common vesting schedules and what “vesting” really means 
• Why RSU taxes are triggered on the vesting date and flow to your W-2 
• The two post-vesting choices that matter most, hold or sell 
• Short-term versus long-term capital gains and why the one-year mark matters 
• How your income level and household situation change the best strategy 
• How ESPPs work, including payroll purchases and typical discounts 
• ESPP tax timing, including the one-year and two-year holding rules 
• Concentration risk with company stock and a 10% net worth rule of thumb