The Compensation Blind Spot

Sometimes the biggest financial opportunities are the ones hiding in plain sight. 

In this Indianapolis Business Journal article, Senior Investment Advisor Ronald Patberg,CFP®, discusses how compensation planning can help professionals make the most of their benefits.

“Executives are experts at spotting opportunity in their business,” says Ron Patberg, CFP^®, Senior Investment Advisor and Partner at Donaldson Capital Management. “I’ve noticed the same people often haven’t looked closely at the opportunity sitting in their compensation.”

Stock options, deferred compensation, retirement plan matches, insurance benefits, and equity grants are more than just perks to check once a year. Left on autopilot, they can cost you real money.

Consider a common scenario: an executive holds vested stock options for years, planning to exercise them eventually. When the company is acquired or as the stock’s exercise expiration date approaches, the options get exercised all at once. This pushes the executive into a higher tax bracket for the year, forfeiting the chance to spread the gain across multiple years. The options were never mismanaged; they were just never planned.

“Running a successful company and having an optimized financial life are different skill sets,” Patberg says. “I see leaders who are excellent at one and haven’t had the time to think about the other.”

This blind spot tends to show up at predictable moments: after a business sale, ahead of a leadership transition, or simply as compensation grows more complex year after year. The busier the moment, the easier it is to let good benefits run on autopilot.

Where the Gaps Usually Show Up

Patberg sees the same patterns across his clients who run companies:

• Executives often exercise or sell stock options on a set schedule rather than a planned one. Timing matters most for  taxes.
  
  
• Retirement plan contributions get set once and left alone, even as income, tax bracket, or goals change.
  
  
• Deferred compensation plans rarely come with an exit plan, so when the money becomes available, there’s no strategy for it.
  
  
• Insurance and executive benefits get chosen once and reviewed in isolation, never as part of the bigger financial picture.

None of this reflects poor judgment. It’s what happens when successful people spend their time running a business instead of reviewing their own compensation. The good news is that these gaps are common and entirely solvable. With targeted advice and a few small adjustments, executives can unlock more value from their compensation plans and ensure these benefits truly work for them.

Why This Matters Now

“People don’t usually notice the cost of waiting,” says Patberg. “It’s not dramatic. You just wake up one day and the window’s closed, or you exercised an option at the wrong time, or you never got around to bumping up your contribution. Almost all of that is fixable if you catch it early.”

You probably don’t need to change everything. But it’s worth asking if you’re making the most of what you already have.

Take a moment to do a quick assessment: When was the last time you reviewed your stock options, retirement plan contributions, deferred compensation, and benefits? If it has been more than a year, or if your role or personal life has changed, it may be time for a closer look. Consider scheduling an annual review of your compensation package with a financial advisor to ensure you are not missing valuable opportunities.

Connecting the Dots

You know how to spot opportunities. That instinct helped you build your business.

“That same instinct works when it’s pointed at your financial life,” says Patberg. “That’s usually where we come in to help you identify what can be optimized and what could support your goals.”

Donaldson Capital Management works with executives to build a financial plan that integrates compensation and long-term goals. We understand that facing financial complexity is a big hurdle. Reach out today and feel the relief of not having to carry it alone.