Employee Stock Purchase Plans (ESPP) can be a great way to buy your company stock. They are convenient and easy to implement. In addition, you purchase shares with after-tax payroll deductions.
They are enticing and the big question is, should you participate in your company’s ESPP?
Participate or Pass?
Many ESPPs offer a discount when you buy the shares and this can be a large incentive for you. This means you can get the shares cheaper than what they sell for in the stock market. Sounds like a great deal!
Also, the plans usually buy company stock for you at set intervals so you get different share prices along the way.
When you participate in an ESPP, you will own more company shares and the risks are dependent on the stock price ups and downs. You should also consider, is it a good idea to own more of your company stock?
How comfortable are you owning more shares via an ESPP in addition to RSUs and stock options?
This is a question that you’ll need to contemplate. It may take you a few minutes to decide. Or it could take a few days. It’s important to consider.
Share Price Impact on ESPPs
If you decide to go along with ESPP participation, a lot of times the share price may influence your decision.
But it’s best to be wary of “resulting” from the share price. When you own more shares and the stock price goes up. That’s wonderful and you’re in a better position.
But what if the stock price goes down? Maybe the ESPP wasn’t such a great idea.
If the share price stays the same, then you may feel just “blah” about the entire situation.
But these reactions are after the fact, so pay attention to them.
What To Do
Make a decision about ESPPs that is comfortable for you and keep moving forward. The share price is important for ESPPs, stock options, RSUs, and all kinds of ownership.
Want to chat about ESPPs and company ownership? We can set up some time.