Tech workers paid in equity are watching their wealth slide alongside their employers’ share prices this year, but the news may not be as bad as it seems. The Nasdaq Composite is down 23% for the year and is well entrenched in a bear market. Higher interest rates tend to hit tech companies especially hard, as they damage the value of their future cash flows . Few names have been spared from the downturn: Established stalwarts such as Alphabet are down about 23% in 2022, while pandemic-era darlings Robinhood and Peloton have cratered more than 43% and 60%, respectively. Though the paper losses are enough to make tech workers flinch, there are a few savings opportunities for those who know where to look and who can stomach the volatility. “This is actually not a bad situation if you’re working for a tech company and your stock price is down,” said Megan Gorman, founder of Chequers Financial Management. “You have to take the long-term view of this.” Different flavors of equity compensation Companies can offer equity in different ways. For instance, restricted stock units give workers shares in the future after a vesting period. Recipients are subject to taxes when their holdings vest and they receive the shares. Employers can also issue incentive stock options, which give workers the right to buy a set number of shares at a specified – or strike – price. Employees don’t pay taxes on these ISOs at receipt. Rather, they pay capital gains taxes when they sell the stock they’ve purchased. These employees may be subject to preferential long-term capital gains tax rates of up to 20% if they follow a set of rules , including holding the ISO stock for at least a year. ISOs bring another complication: the alternative minimum tax . This levy applies to the difference between the strike price and the fair market value of the stock, known as the bargain element. Non-qualified stock options or NSOs are subject to ordinary income taxes when employees exercise them. If your shares appreciate and you sell your holdings, you’re also subject to capital gains tax. A playbook for the downturn Tech employees shouldn’t dump their holdings in a panic. Here are a few key points to consider as shares decline. Weigh your risk appetite and your company’s prospects. “What level of concentration or diversification makes sense for your goals or needs?” said Samuel Deane, founder of Deane Wealth Management. “The worst position to be in is when the majority of your portfolio is made up of one company and the company starts laying off folks due to the downturn.” Based on an investor’s time frame and risk appetite, it may make sense to come up with a strategy to periodically sell some of those employer shares. With restricted stock units, for instance, employees who want to dilute some of their concentration can sell a few shares and diversify into a low-cost fund that offers broad market exposure, said Gorman. Seek tax planning opportunities. There’s a silver lining for workers who want to exercise ISOs when share prices are low. The difference between the strike price and the fair market value of the stock has narrowed, and that means the alternative minimum tax impact will be smaller. “What can you exercise now to lock in a smaller bargain element for less AMT tax?” said Albert J. Campo, CPA and president of AJC Accounting Services. Employees can also consider selling shares that have depreciated in value to generate losses that will help them offset realized gains elsewhere in their portfolio. This is known as tax loss harvesting . Consider negotiating. If your share values are depressed, push for refresher grants — more equity — or cash bonuses at work, said Deane. Indeed, Robinhood and Snap are among the companies offering equity grants or cash to employees who have taken a hit from falling share prices. Pay close attention if you decide to snap up more equity. “You’ll want to know where the company is going,” said Campo. “A conversation with a Peloton employee would be different from a conversation with a Snowflake employee. It depends on the outlook.”