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 lets you buy company stock at a discount.
Typically, you tell the company to take a certain percent out of every paycheck and put it into your ESPP account. At the end of the period, we’ll buy company stock at a discount. The most common way this works is through 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.
After almost 20 years working in tech for companies including eBay, Yahoo!, Intuit, and startups, I made a career change into the financial world as a fee-only financial planner more than a decade 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 tech professionals make the most of their stock options and RSUs to help them reach their financial goals.
