It's much more tax efficient for Chesky to get loans against his equity in lieu of cash compensation -- especially if he believes that the equity will grow dramatically in value due to an IPO.
Hi! Random q, but where could I read more on this specific topic? :)
Take a look at PAL, pledged asset lines or margin loans.
Thx! :)
For public securities, margin or a pledged asset line. If it's private equity (structured lending), you'll need to speak with a banker who can structure a deal specifically for you based on an illiquid PE holding.
Thank you :)
I've heard this before, but what advantage does the loan have? Doesn't the CEO still pay just as much tax when he/she sells the stock to pay down the loan? Is it just to allow the stock a chance to appreciate?
It's to capture future possible growth and defer taxes into the future.
I'd guess just savings on paying capital gains tax vs income tax?