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Employee Stock Purchase Plans, Ep 7



In continuing our Equity Compensation series, today we are talking about ESPPs. Wondering what ESPP stands for? Well, it’s an Employee Stock Purchase Plan and the most common form of equity compensation that we will cover. It’s available to almost any full-time employee of a publicly-traded company; and for this reason, it’s my favorite kind of compensation. 


So what is an ESPP exactly? It’s a great vehicle to allow employees to purchase employer stock, preferably at a discount. The advantage is you get to buy the stock from the company you work for at a price that is lower than it would be if purchased on your own. When you participate in an ESPP, your investments are held in a regular old investment account. Check out the episode to find out why and maybe some other useful tips too!  

You will want to hear this episode if you are interested in...


  • Who can get an employee stock purchase plan? [0:21]

  • Advantage of an ESPP [1:25]

  • Key differences between an ISO & an ESPP [2:32]

  • How ESPPs operate [3:56]

  • The ins and outs of offering periods [5:02]

  • The sales tip section: How NOT to get referrals! [7:58]

  • This week’s FLASHBACK [10:17]



How do employee stock purchase plans operate?


An interesting thing with the ESPPs is how most of these plans work differently than the way they are described within the tax law. It’s about as clear as mud! Since a great deal of these employee stock purchase plans cover all employees a majority of plans are set up to allow participants the opportunity to buy company stock at a discounted price through a payroll deduction. Of course, plan specifics differ from employer to employer so be sure to talk to your benefits people to make sure you have the right information for your ESPP and listen to the full episode to have a better understanding before you do so!


Commonalities and variables across most plans


Regardless of who your employer is there are some common practices when it comes to ESPPs. Such as, an offering period and having a percentage withheld from your check to buy the stock at the end of the period. Some variables can include different rates of discount on the stock and whether purchasing at the beginning or end of the period is best— or even exercising the purchase at all. Listen to episode 7 to hear more and check out episode 6 if you missed the basics about employee compensations.


FLASHBACK to the mid ’80s and the peak of movies!


I saw a tweet recently that listed some of the movies that were released in 1984. As I share some of these movie titles maybe you'll flashback to riding your bike to the local theater or watching these classics with your friends as I did. Some of the classics include Terminator, Ghostbusters, Dune, Nightmare on Elm Street, Gremlins, & Beverly Hills Cop, Revenge of the Nerds, Karate Kid, Red Dawn, 16 Candles, Splash, Footloose, The Last Star Fighter, and so many more. I firmly believe the mid-eighties were the peak of movies during my lifetime. Yeah. I love my Marvel superhero movies, but the classics like The Breakfast Club set themselves so far apart. All right, enough traveling down memory lane and as always thanks for tuning in and giving me some of your time.