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In an employee stock purchase plan (ESPP) that is tax-qualified under Internal Revenue Code Section 423, a lookback allows the purchase price (with or without a discount) to be based on the market price at either the beginning or the end of the purchase period, whichever price is lower (a typical purchase period runs for six months).
Example: In a plan with a lookback and a 15% discount, if the stock price is $10 at the beginning of the purchase period and goes up to $20 at the end, your purchase price is just $8.50 ($10 minus 15%).
The compound lookback is sometimes written look-back or look back.
For details on lookbacks and ESPPs in general, visit the ESPP section of this website.
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