ESPP: Are Employee Stock Purchase Plans Worth It?

An ESPP, or Employee Stock Purchase Plan, is a benefit some public companies offer to their employees.

What Is an Employee Stock Purchasing Plan (ESSP)?

An ESSP allows you to buy your company’s stock at a discounted value, usually around 5-15% of the fair market price.

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How Does an ESPP Work?

First, every stock has an offering period which is the amount of time your employee contributions are deducted from your paycheck via payroll deductions and kept aside by the company to make a purchase.

What Are the Benefits of an Employee Stock Purchasing Plan?

- Discounted Purchase Price - Overcome Investing Hurdle - Favorable Tax Treatment

What Are the Potential Drawbacks of an Employee Stock Purchasing Plan?

- Taxes - Regulations - Purchase Limits - Opportunity Costs

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Why Do Companies Offer ESPPs?

- Retention & Recruitment - Provide a sense of employee ownership - Increase capital within a company - Tax deductions

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