Employee Stock Purchase Plan

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Employee Stock Purchase Plan (ESPP)

A plan usually linked to a corporation's payroll deduction system allowing employees to purchase shares at a discount from current market value.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Employee Stock Purchase Plan

An employee benefit that some firms offer allowing employees to use payroll deductions to buy shares in the firm at a discount from their fair market value. The firm offers this to employees at certain times; those who participate in the program allow the payroll deductions to accumulate for a certain number of pay periods. At the end of the period the firm uses the funds to purchase the number of shares worth that amount. The percentage discount varies from firm to firm, but can be as much as 15%.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
While the positive impact of ESPPs on 401(k) loans was evident in companies of all sizes, the difference was notable in small companies (less than 500 employees), where only 9% of workers took out new 401(k) loans when an ESPP was also available, compared to 14% for employers that only offered a 401(k).
Although taxes still apply, workers can access assets within an ESPP without penalties and/or the repayment requirements incurred when they take a loan or withdrawal from their 401(k) account.
Some software programs used for the calculation of stock-based compensation and EPS do not have the special features needed to accommodate the specific requirements of ESPP calculation.
The patients who actually committed suicide whilst under the active care of ESPP of CPH from its establishment on 1 July 2002 up to 31 March 2010 were identified.
ESPP requirements: The regulations clarify that the plan document requirements might be satisfied by the terms of the plan document or the terms of the offering under the plan.
"The proposition is," says John Barton, projects director with Wilton-based Renew, a partner for the ESPP, "if we have piped the CO nearly 200km out to sea, we are halfway to the North Sea oil fields.
For ESPPs, corporations will find that the list in the new regulations is a significant expansion of the list provided in the old regulations.
Thus, an ESPP is a form of deferred compensation with the amount of compensation based on increases in the value of the company's stock.
* Employees of corporations with an employee stock purchase plan (ESPP) often fail to participate fully in the plan because they don't understand why it can be a good deal.
Included in the latest releases are Notice 2001-14, addressing the employment taxation of Incentive Stock Options (ISOs) and Employee Stock Purchase Plan (ESPP) options; Announcement 2001-7, postponing the earlier announcement requiring the segregated reporting of non-qualified stock option income on Forms W-2; and final regulations pertaining to qualified transportation fringe benefits.