How Much Company Stock Is Too Much?
If you work for a company that offers stock options, RSUs, ISOs, ESPPs, or other forms of equity compensation, you may eventually find yourself with a surprisingly large amount of your wealth tied to your employer's stock.
This is especially common among high-earning employees in the Research Triangle, including professionals working in Raleigh, Cary, Morrisville, Durham, and Research Triangle Park.
But how much company stock is too much?
There isn't a perfect percentage that is right for everyone. Instead, the better question is:
How much company stock is appropriate for your overall financial plan?
When Your Employer Is Also Your Largest Investment
Say you're an employee who has accumulated a significant amount of company stock over several years.
Your employer provides your paycheck, your benefits, and potentially a large portion of your investment portfolio.
That's a lot of financial dependence on a single company.
In September, 2025, a client had a sizeable position in their company. They were able to buy stock over many years, and in one day, last September, their company stock rose ~40%. Meaning that single stock was their largest investment and accounted for over 50% of their net worth.
We immediately jumped on a call with them and talked through the pros and cons of keeping such a concentrated position. After the phone call, they ended up selling the majority of their position and capitalizing on the gains.
Since that day, that stock has decreased by about 50%. Looking back, it seems like a genius move! Did we know what was going to happen after that day? No. Could it have just as easily gone up another 50%, vs. down 50%? Of course. Did we get lucky? Absolutely.
We don't make decisions for our clients based on a gut feeling we have surrounding a stock.
The goal wasn't to predict what that stock would do. The goal was to determine whether the amount of copmany stock the client owned was appropriate for their financial plan.
Questions to Ask About Your Company Stock
If a large portion of your wealth is tied to your employer's stock, consider these questions:
1. How much of my net worth is tied to my company?
Look beyond your brokerage account. Include RSUs, stock options, ESPP shares, your 401(k), and other company-related assets.
2. What happens to my financial plan if the stock falls significantly?
A 50% decline in a concentrated position can have a meaningful impact on your ability to retire, buy a home, fund your child's education, or accomplish other goals.
3. How dependent am I on the company?
Your company stock may already be a significant part of your wealth while your salary provides most or all of your income.
That creates an additional layer of concentration: your financial assets and your employment are tied to the same company.
4. What are the tax consequences of selling?
Selling appreciated company stock can create a significant tax bill. Your cost basis, holding period, income level, and the type of equity compensation you received can all matter.
The tax cost of selling shouldn't automatically prevent diversification, but it should be part of the decision.
You Don't Have to Sell Everything
Reducing company stock exposure doesn't necessarily mean selling everything at once.
Depending on your circumstances, a financial plan might involve gradually selling shares, coordinating sales with your tax situation, establishing a target allocation, or developing a strategy around future RSU vesting and stock option exercises.
The important thing is to make the decision as part of your overall financial plan, not based on whether you think the stock is going up or down next.
Do You Have Too Much Company Stock?
If you're an employee with a significant amount of wealth tied to RSUs, stock options, ESPPs, or company stock, it's worth looking at the entire picture.
At Testament Wealth Management, we help high-earning professionals in Cary, Raleigh, Morrisville, Durham, and throughout the Research Triangle integrate equity compensation into their broader financial plans.
The question isn't necessarily:
"Should I sell my company stock?"
It's:
"Am I holding too much company stock for my financial plan?"