Primary Goals:

• Improve the stock price and create better awareness of his company
• Maintain and optimize his financial independence, so when he decides to stop working, he can live accustomed to how he likes to and fulfill the life he has dreamed for himself.
• Outsource wealth responsibilities to an expert
• Devise a plan that optimizes his investments and benefits:
• Profit sharing assets
• Personal assets
• Deferred compensation plan
• Equity compensation (in the form of options, restricted stock units (RSU’s) and Performance-Based Restricted Stock Units (PSUs)) and employee stock purchase plan (ESPP)
• Disability insurance
• Life insurance
• Health insurance
• Directors and officer insurance
• Property insurance.
• Evaluate his stock concentration and create and implement an investment plan that removes the risks.
• In case of an untimely death ensure his family can continue on with their lifestyle and educations
• Reduce taxes where possible
• Provide guidance on any transition to another employer

Results Executed:

Capital Market Strategy - Rectified the falling stock:

• Removed the large seller trickling out stock each day in a thinly traded market by finding them and bringing a buyer
• Worked with an investor relations firm and other experts to find institutions that might find the stock appealing.
• As we worked with the institutions, we found a few that were particularly interested in the opportunity and worked with a brokerage house to take the seller out of the stock and into the portfolios of long-term stable investors. These investors continued to buy the stock in the open market after making a large cross transaction causing the stock price to double in the months ahead.
• The investor relations firm continued to market the stock to institutional investors and we helped other executives find liquidity in the market with these institutional investors who continued to have an appetite for the stock.

Wealth Enhancement and Tax Planning

• Addressed stock concentration and methods to defer it. Created one diversified portfolio across all accounts (reducing taxes) that attempted to maximize expected return and considered Larry’s specific risks.
• Evaluated Larry’s family cash flow and reduced income, taking full advantage of his benefit programs to reduce taxes. Additionally, minimized taxes on equity transactions and harvested losses when possible.
• Utilized a Health Savings Account to reduce current and future taxes.
• Developed a Roth conversion planning strategy to reduce life time taxes.

Asset Protection and Estate Planning

• Evaluated insurable risks both inside the benefits at Larry’s company and personally and, collaborated with Larry and other experts on the best policies and mitigation for him.
• Evaluated uninsurable risks and collaborated with Larry and other experts on how to mitigate those risks in the form of legal structures and best practices.
• Evaluated the protection and safety of assets, collaborated on costs and other approaches to protect the exposed assets.
• Evaluated estate goals, including the care for Larry’s heirs, and taxes, collaboratively developed a plan prior to bringing in an estate attorney with the appropriate experience to provide the expertise and execute the plan.
• Created two Spousal Lifetime Access Trusts (SLAT) with the assistance of an estate attorney to benefit each of the spouses and ensure asset protection from law suits while giving the spouses access to assets. Additionally, the trusts are to be in low tax and trust friendly states such as Nevada and Alaska and allow Larry and his spouse to take advantage of the higher estate deduction before it is potentially lowered in 2026.

Transition Planning

• Created a compensation and benefits score card to compare to outside offers.
• Reviewed non-compete clause and separation policies of Larry’s company to evaluate risks of transitioning to a new employer.
• Reviewed negotiating approaches to consider when negotiating for a new CEO role.

Disclosure

Note: The above case study is hypothetical and does not involve an actual Pacific Capital Works client. No portion of the content should be construed by a client or prospective client as a guarantee that he/she will experience the same or certain level of results or satisfaction if Pacific Capital Works is engaged to provide investment advisory services