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ChampionX Employees: Smarter Ways to Manage Taxes on Appreciated Stock

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'ChampionX employees with concentrated stock positions may benefit from thoughtful tax planning that allows for tax deferral while balancing liquidity, compliance, and long-term compounding,' Wesley Boudreaux, a representative of The Retirement Group, a division of Wealth Enhancement.

'ChampionX employees who hold highly-appreciated stock may want to consider tax-efficient strategies that help mitigate their liabilities while aligning with their overall retirement goals,' Patrick Ray, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article, we will discuss:

How taxes can affect investment returns, particularly on concentrated stock positions.
Exchange funds and options-based strategies as methods for tax deferral and diversification.
Alternative planning techniques outside ETFs, including charitable trusts and gifting strategies.

By Carlos Hernandez, Wealth Enhancement advisor

When it comes to driving portfolio returns, many investors aim to keep management fees low by investing in low-cost index funds and exchange-traded funds (ETFs). While fees matter, however, the real culprit for lower-than-anticipated performance is taxes. ¹

Wealth Enhancement advisor Carlos Hernandez explains: 'By losing less to taxes each year, investors have access to more capital that can continue to compound over time. This makes tax deferral an important part of an effective financial plan.' ChampionX employees looking for long-term growth strategies could benefit by understanding how to better manage their investment tax burdens.

Trade Money

One area where taxes can take a toll is on the sale of company stock or other concentrated investment positions. ChampionX professionals looking to diversify could face significant capital gains taxes on an outright sale. One way to diversify without triggering immediate capital gains is through exchange funds. By contributing their highy-appreciated stock to a pooled fund, investors can trade their concentrated holdings for shares in a diverse basket of securities. This method can be used by ChampionX employees who want to diversify while postponing taxable events.

Although this method allows for tax deferral, it also requires investors to hold the exchange fund for a period of time, typically seven years. ² This could create a challenge for investors who require liquidity. Additionally, these funds are often exclusively accessible to wealthy, accredited investors—something ChampionX executives should carefully evaluate.

Funds Based on Options

Another way to mitigate taxes on the sale of highly-appreciated stock is by using options contracts. The idea is to hedge risk with put options while covering the cost of those puts by selling call options—a strategy called 'collaring'. From there, the strategy reverses, with investors selling put options and using the proceeds to buy call option on an equity or bond index. ³ If managed effectively, this helps to diversify a concentrated portfolio while still maintaining liquidity.

Given the complexity of this strategy, meticulous planning is necessary. It's generally recommended that investors work with an experienced financial advisor before pursuing this approach.

Things to Be Aware of

Although these strategies can be beneficial for ChampionX employees who hold highly-appreciated stock, caution is recommended. There are costs associated with these approaches, and potential liquidity risks. Additionally, the IRS may eventually contest such arrangements because their tax status has not been thoroughly examined—something ChampionX retirees should keep top of mind.

'Tax drag reduction strategies can be effective, but they must be assessed through the lens of risk, liquidity, cost, and compliance,' warns Carlos Hernandez. What is appealing in theory must hold up to inspection in the real world.

Alternative Strategies

Although they show promise, investors with highly-appreciated stock or those looking to postpone gains have other alternatives besides exchange funds or options. Other tactics could include:

- Prepaid variable forwards (subject to IRS regulations, contracts to sell at predetermined terms in the future).
- Charitable remainder trusts (CRTs), which allow investors to donate appreciated stock to a charitable trust and receive a stream of regular income in return.
- Donor-advised funds (DAFs), which provide investors with a tax deduction for the fair market value of the appreciated stock they donate.
- Other gifting techniques, such as direct donations to charity or family.
Each has its own set of guidelines, advantages, and disadvantages. To limit unnecessary taxes or violating the constructive sale regulations, careful planning is necessary for ChampionX professionals managing complex portfolios.

The Bottom Line

Although the movement to mitigate the tax burden on investments is not new, the instruments are changing. Both exchange funds and options-based structures offer investors a way to manage tax liabilities, especially for ChampionX employees who hold highly-appreciated stock.

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In the end, taxes are unavoidable. However, with the correct set of instruments, they can be controlled and postponed. 'The real value comes from aligning tax strategy with investment strategy,' summarizes Carlos Hernandez.

Sources:

1. BlackRock Advisor Center. ' Investing for After-Tax Returns ,' 2025.

2. Kiplinger. ' Four Clever and Tax-Efficient Ways to Ditch Concentrated Stock Holdings ,' by Robert Waskiewicz. Sep. 11, 2025.

3. Financial Planning Association. ' Tax-Efficient Ways to Diversify Concentrated Stock Positions ,' by Peter Lazaroff. Oct. 2024.

What type of retirement savings plan does ChampionX offer to its employees?

ChampionX offers a 401(k) retirement savings plan to its employees.

Does ChampionX provide matching contributions to the 401(k) plan?

Yes, ChampionX provides matching contributions to the 401(k) plan to help employees save for retirement.

What is the eligibility requirement for ChampionX employees to participate in the 401(k) plan?

Most ChampionX employees are eligible to participate in the 401(k) plan after completing a specified period of employment.

Can ChampionX employees choose how much to contribute to their 401(k) plan?

Yes, ChampionX employees can choose to contribute a percentage of their salary to their 401(k) plan, within IRS limits.

Are there investment options available in the ChampionX 401(k) plan?

Yes, ChampionX offers a variety of investment options within the 401(k) plan for employees to choose from.

How often can ChampionX employees change their 401(k) contribution amounts?

ChampionX employees can change their 401(k) contribution amounts at designated times throughout the year.

Is there a vesting schedule for ChampionX’s matching contributions?

Yes, ChampionX has a vesting schedule for matching contributions, which determines when employees fully own those contributions.

Can ChampionX employees take loans against their 401(k) savings?

Yes, ChampionX allows employees to take loans against their 401(k) savings under certain conditions.

What happens to the 401(k) plan if a ChampionX employee leaves the company?

If a ChampionX employee leaves the company, they have several options for their 401(k) savings, including rolling it over to another plan or withdrawing the funds.

Does ChampionX offer financial education resources for employees regarding their 401(k) plan?

Yes, ChampionX offers financial education resources to help employees understand and manage their 401(k) plan effectively.

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.

In 2024, ChampionX announced a significant restructuring plan, resulting in a reduction of approximately 10% of its workforce. This decision includes consolidating operations and closing several regional offices.

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For more information you can reach the plan administrator for ChampionX at 777 Post Oak Blvd., Suite 600 Houston, TX 77056; or by calling them at 1-281-600-6000.