What Jabil EVP Steven Borges Sells $1.6M in Company Stock Means for Your Personal Finances

Introduction

Imagine you've worked at your company for several years, and through stock options, an employee stock purchase plan, or equity grants, you now hold a significant amount of company stock—maybe $50,000, $100,000, or even more. Every morning, you watch your net worth fluctuate with the stock ticker. When the stock rises, you feel wealthy. When it drops, you wonder if you should have sold months ago.

This is exactly the situation countless employees face, and it's why news about executive stock sales matters to everyday investors. When Jabil Circuit Inc. Executive Vice President Steven Borges recently sold $1.6 million worth of company stock, it sparked questions: Should you be worried about Jabil? More importantly, what does insider selling behavior teach us about managing our own concentrated stock positions?

Here's the reality: Borges's sale isn't necessarily a red flag about Jabil's future. Executives sell stock for dozens of legitimate reasons—buying a house, diversifying retirement assets, funding children's education, or simply taking profits after years of accumulation. But his decision does highlight a crucial personal finance question you might be ignoring: Should you hold concentrated company stock or diversify into broader investments?

The answer could mean the difference between building lasting wealth and watching years of gains evaporate in a single downturn.

Quick Answer

For most investors, diversifying out of concentrated company stock into broad market index funds is the smarter long-term strategy. Research shows that individual stocks carry 3-4 times more volatility than diversified portfolios, and employees already have significant "human capital" exposure to their employer through their salary. However, if your company stock represents less than 10% of your total portfolio and you have strong conviction in the company's growth prospects, holding some shares can be reasonable. The key is never letting a single stock control your financial destiny.

Option A: Holding Concentrated Company Stock Explained

Concentrated stock refers to a portfolio where a single company represents more than 10-15% of your total investable assets. This situation commonly occurs among employees who receive equity compensation—stock options, restricted stock units (RSUs), or shares purchased through an Employee Stock Purchase Plan (ESPP).

How It Works

When you receive company stock as compensation, you're essentially being paid in ownership shares rather than cash. RSUs typically vest over 3-4 years, meaning you gradually gain full ownership. Stock options give you the right to purchase shares at a predetermined "strike price," which can be highly valuable if the stock price increases significantly.

For example, if you received 1,000 RSUs at Jabil when the stock was $80, and the current price is $135, your holdings would be worth $135,000—potentially a substantial portion of your net worth.

Pros of Holding Concentrated Stock

• Unlimited upside potential: If your company's stock triples, so does your investment. Early Amazon and Apple employees who held their shares became millionaires.
• Tax deferral benefits: You don't owe capital gains taxes until you sell. Long-term capital gains (assets held over 12 months) are taxed at 0%, 15%, or 20% depending on income—significantly lower than ordinary income rates up to 37%.
• Alignment with company success: Holding stock keeps you financially motivated to contribute to company growth.
• Potential for qualified small business stock (QSBS) exclusions: In rare cases, you might exclude up to $10 million in gains from federal taxes.

Cons of Holding Concentrated Stock

• Extreme volatility: Individual stocks have standard deviations of 40-60% annually, compared to 15-20% for diversified portfolios.
• Double exposure risk: Your salary AND investments depend on the same company. If layoffs occur during a stock decline, you lose both.
• Opportunity cost: Money locked in one stock isn't growing elsewhere. The S&P 500 has returned approximately 10.5% annually over 30 years; underperforming stocks drag down your entire portfolio.
• Psychological burden: Watching a single stock daily creates stress and often leads to poor timing decisions.

Best For

• Employees at high-growth companies with strong fundamentals and less than 5 years until a major liquidity event
• Investors whose company stock represents less than 10% of total assets
• Those with substantial other assets providing diversification

Option B: Diversifying Into Broad Market Investments Explained

Diversification means spreading your investments across multiple assets—stocks, bonds, sectors, and geographies—so that no single investment can devastate your portfolio. The most accessible way to diversify is through index funds or exchange-traded funds (ETFs) that track broad market benchmarks.

How It Works

When you sell concentrated stock, you convert it to cash (after paying capital gains taxes) and reinvest into diversified holdings. A total stock market index fund like Vanguard's VTI holds over 4,000 U.S. stocks, instantly spreading your risk across the entire economy.

For instance, if you sold $100,000 of company stock with a $40,000 cost basis, you'd owe long-term capital gains tax on $60,000 of profit—approximately $9,000 at the 15% rate. Your remaining $91,000 would then be invested across thousands of companies rather than one.

Pros of Diversifying

• Reduced volatility: A diversified portfolio typically experiences 40-50% less volatility than individual stocks while capturing market returns.
• Protection against company-specific disasters: Enron, Lehman Brothers, and Bed Bath & Beyond employees who held concentrated stock lost everything. Diversified investors lost only a small fraction.
• Predictable long-term returns: The S&P 500 has never lost money over any 20-year rolling period in modern history.
• Lower stress: You stop obsessing over quarterly earnings reports and analyst ratings.
• Ultra-low costs: Total market index funds charge expense ratios as low as 0.03% annually ($3 per $10,000 invested).

Cons of Diversifying

• Immediate tax consequences: Selling triggers capital gains taxes, reducing your investable amount by 10-25% depending on your gain and tax bracket.
• Capped upside: You'll never see a 500% gain from a diversified fund the way you might from a single successful stock.
• Potential employer perception: Selling large amounts of stock might signal lack of confidence to colleagues, though this is more perception than reality.
• Complexity of timing: Deciding when and how much to sell requires strategy.

Best For

• Anyone whose company stock exceeds 15-20% of their total portfolio
• Employees approaching retirement (within 10 years)
• Risk-averse investors prioritizing wealth preservation
• Those who've already "won" by accumulating substantial gains

Side-by-Side Comparison

| Factor | Concentrated Company Stock | Diversified Index Funds |
|--------|---------------------------|------------------------|
| Annual Volatility | 40-60% standard deviation | 15-20% standard deviation |
| Expected Return | Highly variable (-100% to +500%) | ~10% historically (S&P 500) |
| Fees/Costs | $0 (holding costs) | 0.03%-0.20% expense ratio |
| Tax Efficiency | High (no tax until sale) | Moderate (annual distributions) |
| Liquidity | High (can sell anytime) | High (can sell anytime) |
| Risk of Total Loss | Possible (company bankruptcy) | Virtually zero |
| Correlation to Salary | 100% (same employer) | ~0% (economy-wide) |
| Minimum Investment | N/A (received as compensation) | $1-$3,000 depending on fund |
| Time Required | High (monitoring needed) | Low (set and forget) |
| Emotional Stress | High | Low |

How to Choose the Right One for You

The decision to hold or diversify isn't binary—it's about finding the right balance for your situation. Use this framework:

Calculate Your Concentration Percentage

Divide your company stock value by your total investable assets (exclude home equity and emergency funds). If it's above 20%, you're taking substantial risk. Above 40%, you're gambling.

Example: $200,000 in company stock ÷ $500,000 total portfolio = 40% concentration (high risk)

You can model your entire portfolio allocation with the [Net Worth Calculator](https://whye.org/tool/net-worth-calculator) to get a clear picture of your concentration level.

Assess Your Human Capital Exposure

Consider your age and career stability. A 30-year-old has roughly $2-3 million in future earning potential. If that income depends on the same company as your stock holdings, your true exposure is massive.

Rule of thumb: The more your career depends on your company's success, the less stock you should hold.

Evaluate Your Financial Goals Timeline

• 0-3 years to major expense (home purchase, college): Diversify aggressively—you can't afford a 50% drop
• 3-10 years: Gradually reduce concentration to below 15%
• 10+ years: You have more flexibility, but concentration above 25% still carries unnecessary risk

Consider Tax-Loss Harvesting Opportunities

If your company stock is underwater (current price below your cost basis), selling creates a tax deduction. You can deduct up to $3,000 in net capital losses against ordinary income annually, with excess losses carrying forward indefinitely.

Factor In Insider Information Concerns

If you're a senior employee with access to material non-public information, you may have trading restrictions. Consult your company's legal team and consider establishing a 10b5-1 plan—a predetermined trading schedule that provides legal protection.

Common Mistakes People Make

Mistake #1: Treating Unrealized Gains as "House Money"

Many employees view stock gains as "free money" they can afford to lose. This is psychologically seductive but financially dangerous. A $100,000 gain represents real wealth that could fund retirement, pay off debt, or provide security. Watching it evaporate because you felt it wasn't "really yours" is a devastating mistake.

The fix: Treat every dollar of portfolio value as equally real, regardless of how you acquired it.

Mistake #2: Letting Taxes Drive 100% of the Decision

Yes, selling triggers capital gains taxes. But paying 15-20% in taxes while locking in gains is far better than watching your stock drop 50% tax-free. A $100,000 position that drops to $50,000 loses $50,000 in value. Paying $15,000 in taxes to protect $85,000 in diversified wealth is mathematically superior in most scenarios.

The fix: Calculate your after-tax proceeds and make decisions based on total wealth, not tax avoidance alone.

Mistake #3: Selling All at Once Instead of Systematically

Panic-selling your entire position after a stock drop (or after reading about an executive sale) often means selling at the worst time. Similarly, dumping everything at once after a run-up might mean missing further gains.

The fix: Implement a systematic selling schedule—for example, selling 10-20% of your position every quarter over 12-24 months. This averages your exit price and removes emotional decision-making.

Mistake #4: Ignoring the Lesson from Executive Sales

When Steven Borges sells $1.6 million in Jabil stock, he's demonstrating a principle most retail investors ignore: even highly-paid executives who believe in their companies diversify their personal wealth. If the EVP doesn't keep 100% of his net worth in company stock, why should you?

The fix: Follow the behavior, not just the headlines. Executives consistently diversify, and so should you.

Action Steps

Step 1: Calculate Your True Concentration (This Weekend)

Log into all your investment accounts—401(k), IRA, brokerage, ESPP—and total your company stock holdings. Divide by your total investable assets. Write this percentage down. If it exceeds 15%, proceed to Step 2 with urgency.

The [Net Worth Calculator](https://whye.org/tool/net-worth-calculator) can help you organize all these accounts and compute your exact concentration percentage in minutes.

Step 2: Establish a Target Allocation (Within 2 Weeks)

Decide what concentration level you're comfortable with long-term. For most people, 5-10% is reasonable. Calculate how many shares you need to sell to reach this target.

Example: Current holdings $150,000, target 10% of $400,000 portfolio = $40,000 target. Sell $110,000 worth over time.

Step 3: Create a Systematic Selling Schedule (Within 30 Days)

Set calendar reminders to sell a fixed percentage or dollar amount monthly or quarterly. Consider using your brokerage's automatic sale features if available. If you're a company insider, work with legal counsel to establish a 10b5-1 plan that automates sales.