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.