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An Employee Stock Purchase Plan (ESPP) is a program offered by some companies that allows their employees to purchase company stock at a discounted rate. This is a great way for employees to take part in the success of the company that they are helping to build, and to potentially benefit from any capital appreciation in the company's stock.
Employees typically contribute money through payroll deductions, which builds up until a designated purchase date. The contributions then accumulate until the designated purchase date when the pooled funds are used to purchase shares at the discounted rate. ESOPs are typically funded through salary deposits made by employees, although some companies may fund the plan with the offerors own stock.
The discount on the purchase price can vary from company to company, but in some cases can be as much as 15%. In most company’s ESOPs, there is also a holding period of up to two years in which an employee cannot sell the stock. This encourages employees to invest in the long term security of their company.
In addition to being a great way to reward hard working employees, ESPP also gives employees the opportunity to become shareholders with rights like voting on company issues and dividends. This often introduces a new level of engagement and gives employees a greater sense of responsibility to their company.
Overall, an Employee Stock Purchase Plan is an innovative way for company’s to engage and reward their employees. By offering discounted stock, employees are incentivised to build the security and success of their company while also sharing in its potential profit.
Employees typically contribute money through payroll deductions, which builds up until a designated purchase date. The contributions then accumulate until the designated purchase date when the pooled funds are used to purchase shares at the discounted rate. ESOPs are typically funded through salary deposits made by employees, although some companies may fund the plan with the offerors own stock.
The discount on the purchase price can vary from company to company, but in some cases can be as much as 15%. In most company’s ESOPs, there is also a holding period of up to two years in which an employee cannot sell the stock. This encourages employees to invest in the long term security of their company.
In addition to being a great way to reward hard working employees, ESPP also gives employees the opportunity to become shareholders with rights like voting on company issues and dividends. This often introduces a new level of engagement and gives employees a greater sense of responsibility to their company.
Overall, an Employee Stock Purchase Plan is an innovative way for company’s to engage and reward their employees. By offering discounted stock, employees are incentivised to build the security and success of their company while also sharing in its potential profit.