| Companies offer their employees the opportunity to purchase company stock through ESPPs to let them own shares of the business. ESPPs can take different forms. ESPPs with a discount on the purchase price provide an attractive investment opportunity and a broad-based employee benefit. Making you not only an employee but also a stockholder, an ESPP gives you a personal stake in your company's financial success.
In its 2011 Domestic Stock Plan Administration Survey, the National Association of Stock Plan Professionals found that the following considerations were most prevalent among the top three ESPP priorities reported by companies:
| Objective among top three priorities |
Percentage of companies |
|
Employee ownership |
81% |
|
Corporate identity/ownership culture |
52% |
|
Alignment with shareholder interests |
51% |
|
Competitiveness |
33% |
|
Incentive/reward |
24% |
|
Wealth accumulation |
19% |
|
Retention |
17% |
Joint research by Computershare and the London School of Economics finds that employees who take part in ESPPs feel more motivated, work harder, stay with their employer longer, and are more likely to monitor colleagues and speak up if they are not doing a good job.
Some of the more interesting findings include:
- In the United States, 57% of participants in an ESPP work overtime in a given week, versus 41% of nonparticipants, and are 11% less likely to quit their jobs than those not in an ESPP. Participation also decreases the likelihood of quitting among workers in the UK and Ireland.
- In Australia and South Africa, plan participation reduces the likelihood of quitting among those making higher monthly contributions.
- ESPP participants take a greater interest in their companies' financials: Australia 91% (compared to 70% for nonparticipants ); the US 89% (compared to 50% for nonparticipants); South Africa 68% (compared to 49% for nonparticipants); UK and Ireland 45% (compared to 18% for nonparticipants).
|
Tax errors can be costly! Don't draw unwanted attention from the IRS. Our Tax Center explains and illustrates the tax rules for sales of company stock, W-2s, withholding, estimated taxes, AMT, and more.
Prior FAQ in list
Return to list