Financial advisor for executives

Financial planning for executives whose pay arrives in more forms than salary. Kaetyn St. Hilaire, CFA, plans around stock options, RSUs, PSUs, DSUs and deferred compensation so that each vest, exercise and payout lands in the right tax year, for executives in Calgary and across Canada.

Equity compensation is taxed as employment income first and investment income second. The order, the timing and the concentration risk all need a plan.

For a public company, the benefit is taxed as employment income when you exercise: the share value less the exercise price. If the option meets the conditions, half of that benefit is deducted, so it is taxed like a capital gain. At large employers, options vesting over $200,000 a year, measured at grant, may not qualify for the deduction.

RSUs and PSUs are taxed as employment income on their full value when they vest and pay out. Most plans settle within three years to stay outside the salary deferral rules. Any shares you keep start a new cost base, and later growth is a capital gain.

DSUs, common for directors and senior executives of public companies, are paid only after you leave and must be settled by the end of the year after the year you leave. Choosing the payout year can move a large amount of income into a year with less of it.

Salary, bonus, unvested awards and often a pension all depend on one company. Holding more of the same stock personally compounds the risk. A selling schedule set in advance, inside your company's trading windows, keeps decisions away from the headlines.

Above the registered limits, executive pay often moves into arrangements that pay later. Each one has its own tax timing and its own credit risk.

Registered pensions are capped by the Income Tax Act, so many employers promise a top-up through a supplementary executive retirement plan. It is often unfunded, or secured through a retirement compensation arrangement where half of each contribution is held as a refundable tax. An unfunded promise depends on your employer's health, so know which kind yours is.

A bonus can usually be deferred if it is paid within three years after the end of the year it was earned. Moving a bonus into a year of lower income, such as the year after you retire, can lower the rate it is taxed at.

Many executive agreements accelerate vesting or pay severance when the company is sold and your role changes. Knowing the terms in advance lets you plan for a large, sudden payout rather than react to one.

Donating publicly listed shares directly to a registered charity removes the capital gain on them and still produces a receipt for their full value. For executives holding low-cost shares, it is often the most tax-efficient way to give.

Retirement, resignation and termination are often treated differently in award agreements. Some plans keep vesting for retirees who meet an age and service test; others forfeit everything unvested. Read the definitions before you set a date.

Severance is taxed as a retiring allowance. Only service before 1996 allows a tax-free transfer to an RRSP, so most of a modern package is taxed in the year it is paid unless it can be spread over two tax years.

Not for salary. Employment income cannot be earned through a corporation, and routing it through one invites the personal services business rules. A corporation becomes relevant later, for consulting after you leave, when there is genuine business income from more than one client.

Pensions, deferred payouts and RRIF withdrawals can push retirement income past the OAS recovery threshold, where OAS is clawed back at 15 cents for each dollar above it. Timing deferred compensation and RRSP withdrawals before OAS starts can protect it.

Kaetyn is a Calgary-based financial advisor who works with high earners and medical professionals, particularly physicians and dentists navigating the financial complexities that come with high-income careers. He focuses on actionable strategies: the salary-dividend mix inside a professional corporation, RRSP and TFSA contributions, and a long-term investment plan.

A complimentary, no-obligation conversation about your compensation, your equity and your goals, and a clear explanation of how we can help.