Employee Stock Purchase Plan (ESPP)

What is the Employee Stock Purchase Plan?

An Employee Stock PurchasePlan or ESPP is a benefits program run by companies that allows employees to purchase stock or shares of the company at a discounted price. The stocks or shares are often offered at a discount versus the market value of the share.

How an employee can participate in the Employee Stock Purchase Plan?

Employees can opt in to participate in the ESPP by committing a % of their salary on a monthly basis. The plan has a stock purchase date were the funds contribute by the employees are being used to purchase the shares which later will be distributed to the employees.

How do I check if my company offers an Employee Stock Purchase Plan?

You can find out about your ESPP plan by accessing your companies benefits page or contacting your HR team. In most cases information about the ESPP is included in the company's employee handbook.

Are there any tax benefits associated to the Employee Stock Purchase Plan?

There are tax efficiencies in most ESPP programs and tend to vary by state for US based companies and by country for the rest of the world.

Are there any downsides of participating in ESPP program?

The main downside of the ESPP program is volatility of the stock price. Alghtough the shares will be purchased at a discounted price, the share price might drop below the purchase price at a future date.