Sanders, Van Hollen Plan to Tax Phantom Stock Option Values Will Hurt Economic Opportunity and Damage Growth Companies in the U.S.


March 2, 2020

Contact: Cassie Ann Hodges
Phone: 202-864-5923

WASHINGTON, DC – The National Venture Capital Association (NVCA) today sent a letter to Senators Bernie Sanders (I-VT) and Chris Van Hollen (D-MD) expressing strong opposition to the CEO and Worker Pension Fairness Act, which would tax nonqualified stock options (NSOs) and restricted stock units (RSUs) at vesting, instead of at exercise. This change would tax the phantom value of NSOs and RSUs before any actual value is received, severely impacting the building of high-growth startups in the U.S. by creating a significant financial barrier to providing incentive-based equity compensation for employees.

“Workers at growth companies will face massive tax bills on unrealized income, sometimes in excess of their entire cash compensation under the CEO and Worker Pension Fairness Act,” said Bobby Franklin, President and CEO at NVCA. “Growth company stock valuations can be quite volatile, so these taxes could be paid on income that may never be realized. Decoupling taxation from the receipt of income is a radical, devastating, and inexplicable change to the taxation of equity-based compensation that will create a powerful bias against workers with less wealth and against smaller companies who can’t afford to pay large salaries. I urge Congress to once again reject this proposal, and instead work with us to encourage the creation and growth of more U.S. companies.”

Stock options have been a longstanding and critical tool for attracting talented individuals to work at growth companies, offering a promise that if the company succeeds the gains can be widely shared amongst the firm’s workforce. Stock options have also been a democratic compensation instrument, allowing employees at all levels of a company to share in the company’s value creation.

Read the full letter here.


The National Venture Capital Association (NVCA) empowers the next generation of American companies that will fuel the economy of tomorrow. As the voice of the US venture capital and startup community, NVCA advocates for public policy that supports the American entrepreneurial ecosystem. Serving the venture community as the preeminent trade association, NVCA arms the venture community for success, serving as the leading resource for venture capital data, practical education, peer-led initiatives, and networking. For more information about NVCA, please visit

Devin Miller2020-03-02 20:06:372020-03-02 20:38:59Sanders, Van Hollen Plan to Tax Phantom Stock Option Values Will Hurt Economic Opportunity and Damage Growth Companies in the U.S.