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Information on employee stock option plans (ESOPs) and related services.

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Employee stock option - Wikipedia, the free encyclopedia

An employee stock option (ESO) is commonly viewed as a complex call option on the common stock of a company, granted by the company to an employee as ...

Option (finance) - Wikipedia, the free encyclopedia

)[edit]. These trades are described from the point of view of a speculator. If they are ...

Stock Option Definition | Investopedia

A privilege, sold by one party to another, that gives the buyer the right, but not the obligation, to buy (call) or sell (put) a stock at an agreed-upon price within a ...

Employee stock options - Money Essentials, Lesson 10 Money Mag

Money's guide to stock options gives you vital information on how to handle employee stock options.

How do stock options work? - HowStuffWorks

Job ads in the classifieds mention stock options more and more frequently. Companies are offering this benefit not just to top-paid executives but also to ...

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Stock Options News - Bloomberg

Breaking news about Stock Options. Find the latest articles, videos, photos and blogs about Stock Options.

Employee Stock Options Fact Sheet

An overview of employee stock options: what they are, who uses them and how, whether they constitute employee ownership, and practical considerations.

Understanding Stock Options - CBOE

With options, you can tailor your position to your own situation and stock ... A stock option is a contract which conveys to its holder the right, but not the obligation ...

Exercising Stock Options - Fidelity - Trading - Fidelity Investments

Exercise stock option means purchasing the issuer's common stock at the price set by the option, regardless of the stock's price at the time you exercise the ...

SEC.gov | Employee Stock Options Plans

Employee Stock Options Plans. Many companies use employee stock options plans to compensate, retain, and attract employees. These plans are contracts ...

myStockOptions.com - stock options, employee stock purchase ...

Restricted stock units (RSUs) have become the most popular alternative to stock options. While RSUs share many of the same issues as restricted stock, there ...

Non-Qualified Stock Options - TurboTax® Tax Tips & Videos

Exercising options to buy company stock at below-market price triggers a tax bill. How much tax you pay when you sell the stock depends on when you sell it.

Employee Stock Purchase Plans


An employee stock purchase plan (ESPP) lets employees purchase company stock at a discount of up to 15 percent off of its fair market value. An ESPP isn't a retirement plan — that would be an employee stock ownership program (ESOP), in which your company contributes stock to a retirement fund. Instead, an ESPP allows employees to purchase stock and do what they want with it, whether that's selling the stock immediately or holding on to it for years. By starting an ESPP, you can:
  1. Reward employees without raising their salaries.
  2. Motivate employees by tying their total compensation to the performance of the company.
  3. Provide an added perk without greatly affecting your bottom line.

Learn how ESPPs work

An ESPP doesn't provide employees with a 15 percent off coupon for buying stocks. To get the discount, they must have funds deducted from their paychecks.

Learn the law

For employees to get the full benefits of an ESPP — namely for purchases of stock by employees to be tax-free — your plan must meet the requirements of Section 423 of the Internal Revenue Code.

Find an ESPP manager

While ESPP basics are easy to understand, the devil is in the (many) details.

Test your knowledge

Before you pitch an ESPP plan to your employees, make sure you have the lingo down pat so that you can answer their questions.

Get employees on board

Despite the "instant profits" that employees can make on ESPPs, the sign-up rate for such programs is low. A study by Hewitt Associates, a human resources consulting firm, found that only 37 percent of executives participate in their company's ESPP, and the numbers decline with the level of employment: Only 16 percent of administrative employees participate.

Encourage employees to think long-term

Employees can sell the stocks they purchase through an ESPP immediately for quick profit, but selling quickly may not be the smartest thing they can do.
  • Keep employee expectations reasonable: ESPPs aren't guaranteed to make money in the long term.
  • Remind employees of the enrollment period deadlines so potential participants don't miss out.
  • Teach employees that they need to hold onto the stock if they want to avoid certain taxes.
  • Consider providing employees with a company-sponsored accountant come tax time to help them handle sales of stock bought under an ESPP.

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