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.

Financial Advisor, CFP at Vested Financial Planning

After 20 years working for companies including eBay, Yahoo!, Intuit, and startups, I made a career change into the financial world as a fee-only financial planner 9 years ago. I earned my CFP®, spent a few years at a boutique fee-only firm in San Jose, worked 2 1/2 years at a leading wealth management firm in San Francisco, and then left to build the firm I wish had existed when I was working as a tech professional.

My mission is to help other Silicon Valley professionals make the most of their employee equity to help them reach their financial goals.

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