ESPPs: Advanced

ESPP Choices: Flip Or Hold? (Part 1)

Timothy A. Farmer and Gregory G. Geisler
NEW! After you decide to participate in your company's employee stock purchase plan, your next decision is whether to sell the stock soon after purchase or to hold it (and for how long). This article series examines different ways to participate in your ESPP according to relative risk tolerance, timeframe, and needs for money.

ESPP Choices: Flip Or Hold? (Part 2)

Timothy A. Farmer and Gregory G. Geisler
NEW! You can build your employee stock purchase plan into your long-range savings and retirement strategy. This article compares buying company stock at a discount through your ESPP to putting the same money into your 401(k) or another retirement plan.

Employee Stock Purchase Plans & Your Financial Planning (Part 1)

Bruce Brumberg
Employee stock purchase plans (ESPPs) are popular and prevalent at most public companies. However, the structure of these plans is changing. These modifications may affect your decision to participate in your ESPP and its place in your financial planning.

Employee Stock Purchase Plans & Your Financial Planning (Part 2)

Bruce Brumberg
Employee stock purchase plans (ESPPs) are changing in many ways, largely in response to accounting rules. For Part 2, myStockOptions.com asked financial and wealth advisors what they are recommending to clients about ESPP participation.

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When did ESPP expensing become mandatory, and how may my ESPP change?

Mandatory expensing started on January 1, 2006. Companies must recognize an earnings charge unless their ESPPs fit into the discount safe harbor rule. This has led companies to re-examine features of their ESPPs, including...

UPDATED! Do surveys show how employee stock purchase plans are changing with mandatory expensing?

Companies are taking various approaches to modifying their ESPPs. Other than making no changes at all, they are considering (or are actually) reducing the discount, shortening the...

UPDATED! Will I receive any mandatory information statement from my company about exercises, purchases, and sales related to my stock options and/or employee stock purchase plan?

Companies often give employees access to their stock option, ESPP, and restricted stock holdings and transactions with paper statements and/or through a website. Apart from the W-2 and 1099 requirements, Section 6039(a) of the Internal Revenue Code requires companies to...

My company's 12-month offering period contains two six-month purchase periods. If I enroll after the start, at the beginning of the second purchase period, what is my lookback offering price?

It is the price at the start of the purchase period in which you begin to participate...

In a down market, why does my ESPP automatically opt me out and re-enroll me in a new offering period?

Some plans are designed to start a new offering period every...

How will my broker know which shares to sell? Should I identify them in some way?

If you have more than one batch of company stock, you are responsible for providing your broker with enough information to identify which shares to sell. If you do not specify...

How does the company know I've sold my shares?

Companies use various methods to track your stock sales. These methods include...

UPDATED! How common is it for an ESPP to have a mandatory holding period for purchased stock?

With a mandatory holding period, the ESPP stock certificates are held by...

Can I name a beneficiary for my stock options, ESPPs, stock appreciation rights, or restricted stock?

You should read the terms of your stock plan and grant agreement. If the plan allows...

If I die, what will happen to my ESPP participation and the holding period rules?

If your employment ends, most Section 423 ESPPs automatically...

Does participating in an ESPP affect my ability to contribute to a 401(k) plan or IRA?

ESPPs are not tax-qualified retirement plans or profit-sharing plans, so participating in an ESPP has...

Can my company use the IPO price as the ESPP grant date price?

If an IPO company wants to lock in the IPO price as the initial grant date price, it can do so for the initial offering period of up to 27 months...

Can the purchase of ESPP stock be an insider-trading violation?

Generally, there is no violation for the enrollment at the start of the offering period or for the...

Are there any securities-laws restrictions on my sale of ESPP stock?

Federal and state securities laws may restrict...

Do blackout or lockdown periods exist for stock plans? Are there periods during which you can't exercise options or buy stock in an ESPP?

The popular media sometimes confuse the term "blackout" with "lockdown." For stock plans, these terms apply to different...

Can a senior executive or board member participate in an ESPP?

Section 423 plans are limited to employees...

I am an officer in my company. Should I avoid participating in our ESPP because of Section 16 reporting and issues that stem from liability for short-swing profits?

If your company's ESPP is qualified under Section 423 of the Internal Revenue Code, the Section 16 ramifications of participating in the plan are not as...

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