What is an Employee Stock Purchase Plan or ESPP

Transcript of What is an Employee Stock Purchase Plan

Hi, my name is Tom Lo. I’m with Vested Financial Planning here to help you understand a ESPP.

Your ESPP or Employee Stock Purchase Plan is a benefit for many tech employees at publicly traded companies. It’s a way to buy company stock at a discount.

The way these typically work is you tell the company, take a certain percent out of every paycheck, put it into my ESPP account. At the end of the period, we’ll buy company stock at a discount. The most common way this works is in a six-month call offering period. Then at the end of six months, they will give you a 15% discount off the lower of the price at the beginning of the period and at the end of the period.

So at a minimum, you’re going to get a 15% discount. If the stock has gone up a bunch, it could be even more than 15%. So the ESPP is a great way to get company stock at a discount.

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