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Employee Stock Purchase Program
Posted on 4/29/14 at 6:13 am
Posted on 4/29/14 at 6:13 am
Any advice/prior experience on these?
Starting a new job this summer and in addition to the usual 401(k) stuff they have an employee stock purchase program.
Can contribute 7.5% of after tax pay towards and shares are matched on a 1:1 basis after a 3 year vesting period. Company is very large and has been around for a long time and stock has been very stable dividend payer.
My only concern is that I'm 24 and at the 3 year mark is when I'll probably be seriously looking at b school, is it even worth it to do this?
Starting a new job this summer and in addition to the usual 401(k) stuff they have an employee stock purchase program.
Can contribute 7.5% of after tax pay towards and shares are matched on a 1:1 basis after a 3 year vesting period. Company is very large and has been around for a long time and stock has been very stable dividend payer.
My only concern is that I'm 24 and at the 3 year mark is when I'll probably be seriously looking at b school, is it even worth it to do this?
4
Posted on 4/29/14 at 6:50 am to jso0003
It's NEVER a good idea to turn down free money, especially if it is only 3 years before getting fully vested.
Posted on 4/29/14 at 6:59 am to jso0003
That's a pretty good deal. Ours allows us to put in 10%, but there's no match. They just buy at a discount. At the end of every quarter, they take all the money you contribute and buy at the price at the first or last day of the quarter, whichever is lower plus an employee discount. I like the idea of the match with a vesting period. You start out at 100% returns.....I can wait three years for that.
This post was edited on 4/29/14 at 9:52 am
Posted on 4/29/14 at 7:26 am to Volvagia
Alright, that's generally what I was thinking, just wanted to make sure there wasn't some fatal flaw in these plans that I was overlooking 
Posted on 4/29/14 at 8:20 am to jso0003
I agree with these guys, a 1:1 match is excellent, my company does no such thing.
Posted on 4/29/14 at 8:54 am to jso0003
If the stock goes down 50% you still break even. Sounds like a pretty damn good deal to me, I'd put the maximum allowed in for all 3 years. If you were 60 and about to retire it might warrant more consideration towards risk, but at your age it's a no brainer.
Posted on 4/29/14 at 9:40 am to Chris Farley
quote:
at your age it's a no brainer.
Posted on 4/29/14 at 10:45 am to KG6
quote:
That's a pretty good deal. Ours allows us to put in 10%, but there's no match. They just buy at a discount. At the end of every quarter, they take all the money you contribute and buy at the price at the first or last day of the quarter, whichever is lower plus an employee discount. I like the idea of the match with a vesting period. You start out at 100% returns.....I can wait three years for that.
his sounds like a great deal, most ESPP have gone to shite. For us they do the lowest price in the last 30 days of the quarter for the purchase, but you have to hold onto it for at least 30 days. And this can wipe out any gains.
Posted on 4/29/14 at 12:33 pm to Hawkeye95
The only downside is I'm assuming it's a rolling 3 year match so it's not like after 3 years I get 3 years of contributions matched but it is a nice incentive.
Posted on 4/29/14 at 1:19 pm to jso0003
That is way better than my ESPP. From my understanding I get something similar to Hawkeye
Posted on 4/29/14 at 4:04 pm to Hawkeye95
We don't have to hold on to ours for 30 days, but by the time everything is actually processed and you have the ability to sell, it's about 14 days. I've yet to make under a 30% return though. It's a nice little savings account for me with a ~30% return.
Posted on 4/29/14 at 7:08 pm to jso0003
As others have said, free money is a wonderful thing. But your concern about not being sure you want to commit to staying there long enough to vest is a valid point.
Still, given that it's a relatively stable firm it's probably not a bad thing. Even if you never vest then you still have your own contributions, which should be reasonable even if you don't qualify for the match.
And maybe if things are going well your company will help you pay for b-school and you'll want to stick around anyway. Plenty of firms will do that b/c they can deduct it as an expense from their corporate income tax, it's a way to give a promising employee a raise without having to pay as much for doing so.
Still, given that it's a relatively stable firm it's probably not a bad thing. Even if you never vest then you still have your own contributions, which should be reasonable even if you don't qualify for the match.
And maybe if things are going well your company will help you pay for b-school and you'll want to stick around anyway. Plenty of firms will do that b/c they can deduct it as an expense from their corporate income tax, it's a way to give a promising employee a raise without having to pay as much for doing so.
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