*Oaktree Financial Advisors is neither endorsed by nor affiliated with Eli Lilly
If you are an Eli Lilly employee you have received your 2015 equity awards if you have any vesting this year. Equity awards, including restricted stock units, performance awards and shareholder value awards are paid out in late January/early February each year. The stock awards, net of shares withheld for taxes, are paid into your Merrill Lynch brokerage account. Some things to consider with these awards include the following:
- Decide if you want to continue to hold the Lilly stock or sell it. Once the shares are deposited into your account you can sell the shares at any time.
- Decide what to do with the cash that accumulated from the stock dividends. If you had restricted stock units vest there will be cash for the dividends during the vesting period, in addition to the Lilly stock, deposited into your account. This cash just sits there and earns nothing so you may want to consider other options for this money.
- Make sure ownership of your account is set up appropriately. The Merrill Lynch account that your stock is deposited to is titled as an individual account. This means that if you are married and you pass away, the assets will be frozen until the probate process is completed. Most people, if married, should consider moving these assets into a joint account.
- Determine how big a part of your overall investments the Lilly stock is. In general you don't want to have one individual stock represent more than 10% of your entire investment portfolio. However, when we are talking about your employer's stock, 5% is probably a better recommendation. Why the difference? Because if the company stock is down, the same issues causing the stock to sag may also cause employees to lose their job and income.
Equity awards are a valuable part of your compensation. Treat them as such and take the time to make sure that you are making the best decisions so that they can provide you and your family with the most benefit possible.
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