Nike Stock Options: How To Unlock Their Full Value

Every year, Nike employees are given a unique opportunity to choose between Restricted Stock Units (RSUs), Non-Qualified Stock Options (NSOs), or a mix of both. NSOs offer a high-growth opportunity — if leveraged strategically. The key is to make informed decisions about when to exercise, hold, or sell your stock options based on market conditions, tax implications, and personal financial needs. 

How Nike stock options fit into a holistic wealth strategy

Nike stock options are more than just a component of your compensation package; they are an opportunity to build long-term wealth as part of your broader financial plan.  

One key consideration is cash flow management. You need capital to exercise stock options; without some planning, you may undermine your short-term liquidity. Look to balance unlocking equity value and maintaining financial flexibility.  

Then, there is risk management and diversification. When you work for a great company and believe in what you are doing, there is a temptation to put an outsized portion of your wealth into employer stock, creating an overconcentration risk. A well-diversified portfolio helps mitigate volatility and aligns with a more sustainable wealth-building strategy. 

Why Nike stock options offer more growth potential than RSUs

Stock options can tie some of your financial upside to Nike’s long-term success, unlike RSUs, which provide a fixed value upon vesting. 

The primary advantage of NSOs lies in their unlimited upside potential. The value of a stock option is directly tied to the performance of Nike stock. If the stock price appreciates significantly above the grant price, fantastic. If you take a long-term view and exercise wisely, you are on a good (wealth-building) path.   

NSOs give employees the power to decide when to trigger a taxable event, which is a good news/bad news scenario. You have the autonomy to make decisions (good), but without proper planning, those decisions may leave you with an unnecessary tax burden (bad).  

Long-term holding also plays a role in the potential financial benefits of stock options. Nike’s stock has historically shown strong performance, making NSOs an attractive vehicle for employees looking to build wealth gradually. Still, monitor the expiration dates of stock options to avoid losing their value.  

Special Retirement Vesting Rules: A hidden benefit for long-term Nike employees

One of Nike’s most valuable, yet often overlooked, benefits is Nike’s Special Retirement Vesting Rules. If you’re a long-tenured employee, this policy could significantly impact how you manage your stock options. 

Do you qualify?

To be eligible for Special Retirement Vesting, you must be at least 55 and have worked at Nike for at least five years. In this situation, you don’t lose your unvested stock options upon retirement or separation. Instead, you retain your unvested stock options, which continue to vest over the next 4 years (provided you held those options for at least one year prior to separation). This provides greater flexibility in when you can exercise them and realize that future income. 

Additionally, if you are 60 or older, unvested stock options will vest immediately, further accelerating your financial opportunities. 

What happens to your stock options after retirement?

• You have up to four years post-retirement to exercise your vested stock options. 

• You can sell your stock options up until the earlier of either the expiration date or four years after leaving. 

• If there are large layoffs, Nike may accelerate the vesting of stock options and RSUs or extend exercise windows. 

Since this special vesting is so valuable, anyone who qualifies — or will qualify soon — should strongly consider stock options as part of their financial strategy. If you leave Nike before reaching the required age and tenure, you will have just 90 days to exercise any vested stock options, and all unvested RSUs and stock options will be forfeited. 

Key strategies to unlock the full value of your Nike stock options

The timing of when to exercise stock options can significantly impact returns and taxes. As with any investment, evaluate where the market is, your liquidity needs, and your financial goals. A premature action may lead to painful tax consequences or missed opportunities for stock appreciation. 

Consider spreading exercises over multiple years to avoid tax spikes and to remain in a favorable tax bracket. Additionally, coordinating option exercises with other deferred compensation strategies can enhance tax efficiency. Selling a portion of stock upon exercise can help cover tax liabilities while allowing participation in long-term market growth.  

Nike stock options may help you build long-term wealth, but only with some informed decision-making. Take a proactive approach by evaluating your financial picture, optimizing tax strategies, and integrating stock options into a comprehensive wealth plan. Working with a financial professional can help tailor an approach that aligns with individual goals and ensures the best financial outcomes. 

This content is for informational and educational purposes only and should not be construed as individualized advice or a recommendation for any specific product, strategy, or course of action. Brighton Jones, its affiliates, and employees do not provide personalized investment, financial, tax, or legal advice through this communication. This material is not intended to, and does not, create a fiduciary relationship under ERISA or any other applicable law. For individualized advice tailored to your specific circumstances, please consult with your adviser.