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Model Employee Stock Purchase Program (ESPP)

I contribute to an ESPP program through my company. Below describes the plan which I’d like to have considered for ProjectionLab.

There are two accumulation periods in a calendar year (period: January 1 – June 30 and July 1 - December 31) in each successive calendar year. Through payroll deductions funds are accumulated to allow purchase of company shares on the last day of the accumulation period. Payroll deductions are established between 1% and 10% of my base earnings per payroll period (bi-weekly). “Base earnings” includes my base salary, before reduction for pre-tax contributions to 401(k) plans, health insurance premiums, etc. Payroll deductions continue until the last payday during that accumulation period. As of the last day company shares are traded in an accumulation period, the funds accumulated in my account will automatically be used to purchase company shares. I may increase or reduce payroll deductions for the next accumulation period established as a percentage of my base earnings. The Internal Revenue Code limits the amount I may purchase under the plan to $25,000 worth of shares per year.

The price per share as of the end of any accumulation period is the lesser of (a) 85% of the fair market value of a share on the last stock trading day of the accumulation period (approximately June 30 for period 1 and December 31 for period 2), or (b) 85% of the fair market value of a share on the first stock trading day of the accumulation period (approximately January 2 for period one and July 1 for period 2). “Fair market value” is the per share closing price of a company share as reported by the New York Stock Exchange for that date.

After shares are purchased, they will be credited to my brokerage account.

7 votes

Tagged as Suggestion

Suggested 22 August 2023 by user William

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  • 22 August 2023 William suggested this task

  • 22 August 2023 Kyle Nolan approved this task

  • avatar
    Mike Bendtsen

    In its simplest from, the ability to: * configure ESPP as a Payroll Deduction (funds a Stock account) * capture ESPP discount (like 10%) to help calculate tax on that employer benefit in the year purchased

    Everything else is probably too complex for a future projection analysis…

    ESPP Scenario X% of my post-tax salary is used to purchase company stock, resulting in $Y in my Stock Account every year. This stock was purchased with a Z% discount, that is taxed as an employer benefit.

    Over time, $Y grows at a rate, and over time ProjectionLab will tap into this account to cash out funds as needed for covering expenses. The specifics on what each ESPP purchase period’s cost basis isn’t really relevant as the projection analysis would be like any other stock account…it just being funded on a regular paycheck basis.

    14 May