The top 10 questions to ask about your ESPP
Why participating in a Section 423 ESPP is a super smart move
Articles on employee stock purchase plans
New videos include coverage of ESPP topics
Visit us at the NASPP conference in Las Vegas
Continuing education course on ESPPs for CEP and CFP credit


Think Twice insider trading prevention videos: educate, entertain, and jolt your employees and executives (see the ad below)

NASPP Annual Conference: The 2014 installment of this premier event for stock plan professionals features four days of critical and timely sessions, September 29–October 2 in Las Vegas (see the ad below) Developed for both participants and professionals, a complete online resource about nonqualified deferred compensation plans (see the ad below)


This issue of our quarterly newsletter showcases some of our award-winning content on employee stock purchase plans (ESPPs), including a new professionally produced video on basic ESPP topics. While stock options have been partly eclipsed by restricted stock and RSUs over the past decade, ESPPs continue their strong presence and popularity at many companies.

Below you will find FAQs, articles, and news items that give a taste of our expertise on this and every other topic in stock compensation. For much more, just click through to our main content section on ESPPs and the related parts of the Tax Center. Thanks for reading!

Don't want to wait for our quarterly newsletter updates? The Blog is the best way to stay on top of equity compensation news and the latest developments at our website. You can also follow us on Twitter.

We appreciate your interest in If you do not yet subscribe to Premium or Pro Membership, giving full access to our content and tools, this is a great time to upgrade. All of our content and tools are also available for licensing.

—Bruce Brumberg (Editor-in-Chief)

FAQ: What are the top 10 questions I should ask about my company's employee stock purchase plan?

Employee stock purchase plans (ESPPs) can be designed in different ways and provided with various features that make them appealing to participants. Before you enroll in your company's ESPP, however, you should be sure to know the answers to the following questions.

1. What type of ESPP is it?

2. Am I eligible to participate?

3. Does the ESPP have a purchase discount?

4. Does the plan have a lookback feature?

5. How long is the offering period?

6. Are there purchase periods within the offering period? If so, does the plan have a reset provision?

7. How do I enroll in the ESPP? Once enrolled, am I automatically enrolled in subsequent offering periods?

For other crucial questions to ask about your ESPP, see the full FAQ on This popular FAQ, along with all of the content it links to, is available for licensing by companies.

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Insider Trading Prevention And Education:
Think Twice Video And Intranet Series
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For more information on the Think Twice video series, and a free white paper on insider trading prevention and education, see the Think Twice website. Both DVD and VHS formats are available. Qualified corporate buyers, including new IPO companies, can request free previews. Intranet licensing is available.

FAQ: What makes a Section 423 ESPP a good deal?

What makes this employee benefit attractive is that you can purchase company stock at a discount (up to 15%, depending on your company's ESPP structure) with special tax treatment when you hold the shares long enough. It's an even better deal when your ESPP has a lookback provision. This bases the purchase price discount on the lower price at the start of the offering after the stock price has substantially jumped by the purchase date. You profit even if the stock price has fallen by the purchase date, as an ESPP cannot go underwater, because with a lookback the discount comes off the lower price of either the offering or the purchase-date market price.

Example: Your company uses a 15% discount with a six-month lookback, the offering date price is $10, and the stock market price on the purchase date is $20. Your purchase price is thus $8.50. If instead the stock price had fallen to $8 on the purchase date, your purchase price would be $6.80. In the price-gain situation your increase is 135% ($11.50 spread at purchase divided by $8.50 purchase price). Even in the price-drop example you gain by 17.64% ($1.20 spread at purchase divided by $6.80 purchase price).

Example with 10% discount: Your company uses a 10% discount with a six-month lookback, the offering date price is $10, and the stock market price on the purchase date is $12. Your purchase price is thus $9. If instead the stock price had fallen to $8 on the purchase date, your purchase price would be $7.20. In the price-gain situation your increase is 33% ($3 spread at purchase divided by $9 purchase price). Even in the price-drop example you gain by 11% (80 cents spread at purchase divided by $7.20 purchase price). Plus, this is the appreciation on your money for just six months!

Example without lookback: Your company still uses a 10% discount and a six-month offering period. When the stock market price on the purchase date is $12, your purchase price is thus $10.80. If instead the stock price had fallen to $8 on the purchase date, your purchase price would be $7.20. In the price-gain situation your increase is almost 11% ($1.20 spread at purchase divided by $10.80 purchase price). In the price-drop example you gain by 11% for six months (80 cents spread at purchase divided by $7.20 purchase price). In the down market, the pre-tax gain is identical to an ESPP with a lookback.

Another advantage of an ESPP is that you can easily sell the shares for immediate or long-term savings needs; by contrast, company stock in your 401(k) plan can be sold only for other investments in the plan. Of course, your final net gain in these examples depends on the stock price when you sell the shares and on the taxes. The special tax requirements and treatment pertaining to Section 423 ESPP shares are detailed in the FAQs of the section ESPPs: Taxes. For more on the possible financial gains from ESPPs, see a related article.

Shifts in accounting rules have led companies to reduce the discount on their ESPPs, eliminate the lookback, shorten the purchase period, and/or reduce the amount that can be purchased. However, as suggested by a Reuters columnist in 2013, that trend may be changing. (See another FAQ on modifications companies have made in their ESPPs.)

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Resources on employee stock purchase plans

Below we list some of the major articles and related resources about ESPPs in the award-winning content of On ESPP topics, we have articles and FAQs, a video, a podcast, an interactive quiz, a PowerPoint presentation, and a self-study course and exam for CFP and CEP continuing education credits. All of these are available with Premium or Pro Membership or through corporate licensing.

Six ESPP Essentials by Matt Simon
This two-part article series explains important ESPP aspects and concepts in plain English. Part 1 discusses the basics of ESPP participation, such as enrollment rules, plan types, and offering/purchase periods. Part 2 covers holding periods, tax rules, and the impact of various events, both personal (e.g. job loss) and corporate (e.g. M&A).

Key Dates And Terms You Must Know For Your Company's ESPP by Matt Simon
Your employee stock purchase plan 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.

Year-End Strategies For Employee Stock Purchase Plans: Ideas To Consider by Matt Simon
When you think about year-end financial and tax planning, don't forget to review shares acquired through an employee stock purchase plan. This article outlines issues and strategies to contemplate.

Podcast! Basics Of ESPPs by Bruce Brumberg
In this eight-minute podcast, the editor-in-chief of explains how ESPPs work, including enrollment, offering periods, lookbacks, purchase, and taxation.

Fundamentals Of Employee Stock Purchase Plans by Alisa Baker
Your company's employee stock purchase plan (ESPP) may be one of your best employee benefits. However, to maximize the value of your ESPP, you need to understand how it works. This four-part series covers all aspects of ESPPs, from the basic to the complex. Part 1 is free to all registered users of the site.

Are You Taking Full Advantage Of Your Company's Employee Stock Purchase Plan? by Sandra Sussman
Strangely, many employees don't take advantage of their companies' employee stock purchase plans. This article will show you exactly why ESPPs are a good deal.

ESPP Taxation Made Simple by Matt Simon
To achieve the full advantages of enrolling in your company's ESPP, you must understand the tax consequences of participation. This article explains the tax basics.

Employee Stock Purchase Plans & Your Financial Planning by Bruce Brumberg
ESPPs are popular and prevalent at most public companies. However, the structure of these plans is changing. As this two-part article series shows, these modifications may affect your decision to participate in your ESPP and its place in your financial planning.

ESPP Choices: Flip Or Hold? by Timothy Farmer and Gregory Geisler
After you decide to participate in your company's ESPP, you must choose whether to sell the stock soon after purchase or to hold it (and for how long). This two-part article series examines different ways to participate in your ESPP according to relative risk tolerance, timeframe, and needs for money.

IRS Form 3922 For ESPPs: What You Need To Know, And How It Can Help You Understand ESPP Taxation by Bruce Brumberg
Stock purchases made through an ESPP during a calendar year are reported to you and the IRS on Form 3922 early in the following year. This article explains what you need to know about the information on the form, and how the form can help you better understand the complexities of ESPP taxation.

Employee Stock Purchase Plans: Qualified And Nonqualified Plans by Bruce Brumberg
Bruce Brumberg, editor-in-chief of, developed this presentation for talks and meetings on the basics of employee stock purchase plans. Covered topics include types of ESPP, the ESPP tax treatment, and survey data on the use of ESPPs by companies. (Premium members may request permission to use the PowerPoint version at their companies.)

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NASPP Annual Conference in Las Vegas, September 29–October 2, 2014
Learning and networking for stock plan professionals

Your stock plans are under siege from Congress, the SEC, investors, the media, and the economy. You cannot afford to fall behind in this rapidly changing environment. All companies need to be considering new plan designs, and it is critical that you and your staff have the best possible guidance. The NASPP Conference brings together industry luminaries to provide the latest essential and practical implementation guidance that you need.

Highlights of the 2014 program include:

  • The full picture of how current economic conditions, regulatory reforms, and Say-on-Pay are reshaping stock and executive compensation—and the real-world, practical solutions you need to respond to this rapidly changing landscape.
  • All the current hot topics in stock and executive compensation, including an update on Dodd-Frank rulemaking projects and a roundup of regulatory developments over the past year.
  • Current trends and new opportunities in stock plan design, including TSR and other performance-based awards.
  • The latest news in tax developments.
  • What to expect for the 2015 proxy season, and best practices for executive compensation disclosures.
  • Critical accounting developments and advanced financial-reporting considerations.
  • The latest technologies and innovations in administrative practices.
  • Key international developments that affect overseas and globally mobile plan participants.

The NASPP Conference will be essential to ensuring you keep up during this time of unprecedented change. With the most respected experts in the field, the 22nd Annual NASPP Conference will be a must for anyone who has any role in the design, oversight, or administration of stock and executive compensation.

Engaging new videos include coverage of ESPP topics

Lively, professionally produced videos at serve as helpful gateways into our detailed educational content on equity compensation. Our newest video series covers ESPP topics:

Employee Stock Purchase Plans (ESPPs): Core Concepts & Benefits (3:35) elucidates both the fundamentals of employee stock purchase plans and the benefits that ESPPs can provide. Using animated examples, the video covers key ESPP concepts, including the offering period, the purchase date, lookbacks, and discounts.

This ESPP video has gotten a great response so far. Two other videos, on key concepts and taxes with restricted stock and RSUs, are also popular among the users of

Our videos can be viewed at or at our YouTube channel. The editorial team welcomes comments on the videos, which will soon be joined by others. As with all of the educational content and tools at, our videos can be licensed and customized by companies.

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Visit us at the NASPP annual conference in Las Vegas

We are excited about the NASPP's annual conference, being held this year in Las Vegas (September 29 through October 2). As always, will have its cheerful booth in the exhibit hall. If you attend the conference, please stop by for a chat and pick up a souvenir!

Conference attendees will also have a chance to hear Editor-in-Chief Bruce Brumberg speak in two panel sessions:

10 Mistakes Your Participants Are Making With Their Stock Plans You Need to Know About (Tuesday, Sept. 30, 4:00pm–5:15pm and Wednesday, Oct. 1, 10:15am–11:30am)
Bruce Brumberg (, Mark Curtis (Morgan Stanley), and Kaye Thomas (Fairmark Press)
We all know that award recipients have varying degrees of financial savviness, but how does that impact their well-being, and why should you care as an issuer? Join our experts as they examine the ten most common mistakes participants make and how these blunders can diminish the perceived value of your stock plan.
Embrace The Future! How Technology Can Improve The Participant Experience (Tuesday, Sept. 30, 12:45pm–2:00pm)
Bruce Brumberg (, Christina Howell (Pacific Sunwear), Neta Pyasi (Solium), and Thierry Vo (UBS Financial Services)
With tablets and smartphones, today's workforce is on the move and wants stronger, easier self-service models. This panel will explore ways technology can be and is being leveraged to achieve a more independent and satisfied employee population, reducing calls to you and your staff in the process.

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Nonqualified Deferred Compensation:, A Complete Online Resource For Participants And Professionals

Tax-rate increases and the new Medicare surtax have boosted the popularity of nonqualified deferred compensation. From the award-winning publishers of, features articles, FAQs, a glossary, podcasts, interactive quizzes, and a calculator, all to help you, your clients, or your executives understand and make the most of nonqualified deferred compensation.

  • Clear explanations of NQDC by experts
  • Financial planning, taxation, risks, job loss, and legal issues, along with core concepts
  • Appeals to plan participants, plan providers and administrators, financial advisors, attorneys, and companies with NQDC plans

For companies, education and communication are vital for ensuring NQDC plans work properly to motivate and retain vital executives, directors, and key employees. Companies can license our educational content and tools for websites, print materials, newsletters, and presentations.

For more information on, including its prestigious advisory board, see the About Us section of the website, and please contact us by phone (617-734-1979) or email (

Continuing education course on ESPPs for CEPs and CFPs

The Learning Center has courses of study and exams offering continuing-education credits for Certified Equity Professionals (CEPs) and Certified Financial Planners (CFPs). The course on employee stock purchase plans features articles, FAQs, and a podcast on all aspects of ESPPs. These features are woven into a dynamic, interactive learning tool that teaches the topics in a memorable way. In the exam that follows the course, the answer key also links to relevant content on the site for further reading and learning.

Other courses offered through the Learning Center focus on nonqualified stock options, restricted stock/RSUs/performance shares, SEC law for stock compensation, and financial planning with equity awards. In total, the courses in the Learning Center can provide up to 20 continuing education credits for CEPs and 15 credits for CFPs.

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Subscription and licensing information

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