Executive compensation is often more than a salary. Executives may receive restricted stock units, stock options, deferred compensation, restricted stock, and other equity awards. Each type has its own tax rules, deadlines, and risks.

RSUs are generally taxed as ordinary income when they vest. Nonqualified stock options are generally taxed when they are exercised, while incentive stock options can receive different tax treatment if certain holding rules are met. 

For RIAs, the challenge is keeping track of all these moving parts. The advisor needs to connect compensation decisions with taxes, cash needs, diversification, and the client’s wider financial plan.

How Should RIAs Manage Executive Deferred Compensation?

Deferred compensation can help executives move income from their highest-earning years into retirement. But these plans often require decisions well before the money is paid.

Executives may need to choose when they will receive the money and whether they want a lump sum or payments over several years. Once an election is made, changing it can be difficult. Section 409A also limits when distributions can be made, and mistakes can lead to additional taxes.

RIAs can help by keeping a clear record of each plan, election deadline, payout schedule, beneficiary designation, and expected cash need. These details should be reviewed before an election deadline, not when the payout is already approaching.

How Should RIAs Manage Stock Options and Restricted Stock Awards?

Equity awards create different tax events, so each grant needs its own timeline.

RSUs generally create ordinary income when they vest and settle. This can leave executives with a large amount of employer stock, even when some shares are sold or withheld to cover taxes.

Nonqualified stock options generally create ordinary income when they are exercised, based on the difference between the exercise price and the stock’s value at that time. Incentive stock options can receive more favorable tax treatment if the required holding periods are met, but exercising them can create alternative minimum tax exposure.

Executives should also review their compensation before a merger or acquisition. Section 280G can create additional tax issues around certain golden-parachute payments.

How Can RIAs Use 10b5-1 Plans to Manage Executive Stock?

Executives and other company insiders face restrictions when selling company stock. Blackout periods and rules around material nonpublic information can make it difficult to plan sales at the right time.

A Rule 10b5-1 trading plan can help create a set schedule for future sales. The plan must be adopted in good faith when the executive does not have material nonpublic information and must meet other applicable requirements.

For directors and Section 16 officers, the cooling-off period is generally the later of 90 days after adoption or two business days after the relevant Form 10-Q or Form 10-K filing, subject to a 120-day maximum.

RIAs can connect the sale schedule with tax payments, cash needs, and portfolio diversification while the executive works with company counsel and the broker on the plan itself.

What Other Areas Can Help RIAs Deliver More Client Value?

Executive portfolios can also create opportunities to recover money from securities they already own.

Securities class action settlements totaled approximately $8 billion in 2025, creating a significant pool of potential recovery for investors.

Platforms such as 11th.com automate the process of tracking settlements, matching client holdings, filing claims, and delivering payouts. For RIAs, recovery alpha offers another way to create client value without changing the investment strategy or adding a large amount of work for the advisor.

What Will Executive Compensation Planning Look Like in 2026 and Beyond?

Executive compensation planning will continue to require close attention to tax deadlines, vesting dates, deferred compensation elections, trading rules, and portfolio concentration.

For RIAs, one practical approach is to keep all of these dates and decisions in one planning calendar. This makes it easier to address taxes, diversification, cash needs, and planned stock sales before important deadlines.

FAQ

When are RSUs taxed?

RSUs are generally taxed as ordinary income when they vest and settle.

What is the 10b5-1 cooling-off period?

For directors and Section 16 officers, the cooling-off period is generally the later of 90 days after adoption or two business days after the relevant Form 10-Q or Form 10-K filing, subject to a 120-day maximum.

When must a deferred compensation election be made?

The timing depends on the plan, but elections generally must be made before the year in which the compensation is earned.

What is the 83(b) election deadline?

An 83(b) election generally must be filed within 30 days of the transfer of the restricted property.

How should executives manage concentrated employer stock?

A written diversification plan can help executives reduce concentration while accounting for taxes, company rules, blackout periods, and planned stock sales.