Matt Simon
Your company's employee stock purchase plan (ESPP) can be a strong financial benefit. However, the rules and taxation can be tricky. This two-part article presents six topics you must be familiar with to get the most from your ESPP participation. Part 1 covers enrollment, plan types, and offering/purchase periods.
Matt Simon
Your employee stock purchase plan (ESPP) may be one of the best benefits your company offers. However, to maximize its value, you must know its key dates and terms. This article explains the basics you need to know for your ESPP participation.
Alisa Baker
Your company's employee stock purchase plan (ESPP) may be one of the best employee benefits in your total compensation package. However, to maximize the value of your ESPP, you need to understand how it works. This starts with knowing its basic structure and key terms, and how ESPPs work in both up and down markets.
Alisa Baker
Part 1 looked at the basic structural elements and terms of employee stock purchase plans (ESPPs). Part 2 considers more advanced design concepts, including tax code limits and enrollment rules.
Sandra Sussman
Many employees don't take advantage of their companies' employee stock purchase plans (ESPPs). I want to give you a better appreciation of why ESPPs are a good deal.
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An employee stock purchase plan (ESPP) is a type of stock plan that permits employees to use after-tax payroll deductions to acquire shares of their company's stock. Plans can have...
Employee stock purchase plans tend to be viewed as a benefit while stock options are a form of compensation. From an employee perspective, there are some differences in operations, eligibility, and design...
With ESPPs, the most common criteria for eligibility is...
ESPPs offer many benefits to companies and employees. Surveys show that...
In general, an ESPP fits into one of three categories: tax-qualified, not tax-qualified, or direct purchase...
Employee stock purchase plans of this type are "qualified" under Section 423 of the Internal Revenue Code. When you enroll in the plan...
You can purchase company stock at a discount, with special tax treatment when you hold the shares long enough. The deal is even better when your ESPP has...
If it is structured like a qualified Section 423 plan (except for whatever feature disqualifies it), it will work in the same way but without...
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...
In its 2006 survey of stock plans in many countries, the National Association of Stock Plan Professionals found the following average participation rates...
Companies are taking various approaches to modifying the features of their ESPPs: reducing the discount, shortening the lookback period, or even...
Since these plans are broad-based...
Along with giving you the required prospectus, your company can probably provide brochures and enrollment materials about the plan and how it works. You want to carefully review the...
The IRS lets companies define this as long as...
Fair market value is determined in a number of ways that vary...
Because companies usually pay all costs associated with administering plans...
The deduction amount that you have authorized is withheld from each paycheck and is credited to a non-interest-bearing book entry in your company's accounts. In the short term...
Once you purchase the shares, you are a regular shareholder with voting rights and receive any dividends. Your company may arrange for your shares to be held in book-entry form in an account in your name...
In general, you may sell your shares at...
Whether you hold stock certificates, hold your shares in a brokerage account, or have an online trading account, you will need the assistance of a stockbroker...
If you make a disqualifying disposition with your ISO or ESPP shares...
You will continue to own stock purchased during your employment, but your eligibility for participation in the plan ends. Any funds withheld from your salary will be...
You want to review your ESPP documents for a provision that...
Since, with a brokerage account, your shares are held in "street name" your account will be credited with the split shares on the payable date...
Most ESPPs have a provision that makes an adjustment...
Your contribution does not roll over into the buyer's ESPP, and rarely is the target's offering period continued after the deal is closed...
Check your company's plan for any specific provisions, including its flexibility to amend...
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