An employee stock purchase plan (ESPP) is a type of employee benefit program that allows eligible employees to purchase company stock at a discounted price. This plan is typically offered by publicly traded companies and is designed to encourage employee ownership and loyalty. Employees who participate in an ESPP can contribute a portion of their salary, usually through payroll deductions, to purchase company stock at a predetermined price, often at a discount of up to 15%. The stock is typically held in a trust until the end of a designated offering period, after which it is transferred to the employee’s individual brokerage account. ESPPs are regulated by the Securities and Exchange Commission (SEC) and may have specific eligibility requirements, contribution limits, and tax implications. This type of plan can provide employees with a valuable opportunity to invest in their company’s success and potentially earn a profit through stock ownership.
