How to think about employer's restricted stock

[moustache1979]

I've posted my case study before and got some good feedback from this group.  Since then I've done a good job maxing out available tax friendly options (401k, HSA) and paying down debts. 

I have a few debts left, biggest is ~$198k mortgage at 4.875% (30 year done in '09)

I haven't refi'ed because of 1) LTV and 2) I want to pay off quick and not incur the fees.

My question is - I am going to throw all my cash at the mortgage and hopefully knock out in 2yrs.  This includes my monthly savings, bonus and after tax stock vesting.

Other than my 401k plus match (maxed out) I won't have savings going into investments aside from my employer's restricted stock.   Stock is not mine unti it vests, typically annually.  I have a significant amount, call it $400k pre tax that will vest over the next 5 years.   Can I think of this as my "investing" until I get debts paid off and can start putting all savings into a taxable account?  I have upside/downside risk until I can sell once it vests. Stock is a S&P 500 professional services firm.  Beta = 1.00, and generally fairly good at tracking the index plus a bit of upside over the past 5-10 years. 

[YTProphet]

I haven't refi'ed because of 1) LTV and 2) I want to pay off quick and not incur the fees.

FYI, there are mortgage brokers out there who do $0 fee refi's. I'm doing one right now. Moving from a 4.75% loan to a 4/1% loan and I'm not paying for anything (no points, no appraisal fees, nothing).

[YTProphet]

Also, do you plan on selling a lot of the stock once it vests? It seems that you should since it'd be kinda crazy to have such a high % of your net worth tied up in one company. I'd never have more than 10% of my net worth in one asset.

[eccdogg]

I had a similar situation and here is how it worked out.

1) Make sure you read the fine print on your restrictied stock.  In my case once it vested it was mine, but until that point if I was fired the company was under no obligation to give it to me.  I had about $400k and about $300k vested.  But my company decided the wanted out of the business and hosed me to the tune of ~$100k.

2) I sold every share the day it vested.  I did not want to own that much of one stock, particularly the company I worked for.

3) I always knew that the language on the restricted stock was iffy, so I always gave it a pretty big haircut in my financial plan.

ETA: Mine were RSU's

[seattlecyclone]

What Cathy said. The money is not yours yet. Think of it as a cash bonus with a value to be determined by the market. Plan to sell it as soon as you receive it, and reinvest the proceeds according to your desired asset allocation.

[moustache1979]

Thanks all, helpful