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Employee Stock Purchase Plans
Revised 2001 Printing
by Ryan Weeden, Ed Carberry, Scott Rodrick, Timothy J. Sparks, Barbara A. Baksa, Donna Lowe, Joseph Lazur, Paul Rangecroft, and Al Schlachtmeyer
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Employee stock purchase plans (ESPPs) have become one of the main vehicles of employee stock ownership in the U.S. among public companies and those about to go public. (ESPPs are little used in private companies except for executive stock purchase arrangements.) However, there has been little information in print on how ESPPs work, what the accounting, tax, and other technical issues are, what companies are doing with their plans, and how best to communicate an ESPP to employees. This book is being published to remedy that situation and provide guidance to companies and their advisors. The introduction reviews the basics of ESPPs, while the following chapters cover the technical and practical issues that arise. Sample plan documents are included (not on disk, only as appendices to chapter 1).
Note: The accounting treatment in this book is now out of date. We will be releasing a new edition (hopefully by the end of 2008), but in the meantime, for an up-to-date discussion of accounting for ESPPs, see chapter 9 in our book Selected Issues in Equity Compensation.
Note: The accounting treatment in this book is now out of date. We will be releasing a new edition (hopefully by the end of 2008), but in the meantime, for an up-to-date discussion of accounting for ESPPs, see chapter 9 in our book Selected Issues in Equity Compensation.
Publication Details
Format: Perfect-bound book, 184 pages
Edition: Revised 2001 printing (June 2001)
Status: In stock
Contents
Introduction
Designing and Implementing an Employee Stock Purchase Plan
Administering an Employee Stock Purchase Plan
Accounting for Employee Stock Purchase Plans
Getting the Most Out of Your ESPP
Recent Research and Case Studies
Designing and Implementing an Employee Stock Purchase Plan
Administering an Employee Stock Purchase Plan
Accounting for Employee Stock Purchase Plans
Getting the Most Out of Your ESPP
Recent Research and Case Studies
Excerpts
From Chapter 2, "Administering an Employee Stock Purchase Plan"
There are three methods of issuing shares purchased through an ESPP. Certificates for the purchased shares can be issued and registered in participant names, the purchased shares can be deposited into participants' brokerage accounts, or the participants can arrange to have the shares automatically sold after the purchase occurs (sometimes referred to as a "same-day sale"). There is no requirement that all three of these issuance methods be offered to participants.If participants do not want to automatically sell the shares they have purchased, there are several benefits to depositing the purchased shares into participants' brokerage accounts instead of issuing certificates registered in the participants' names. Issuing certificates registered in the participants' names causes one certificate to be issued to each participant. Each certificate is delivered separately to each participant, and depending on the delivery service used, there can be either delays or expense associated with this process. Participants assume liability for lost or stolen certificates, and there are additional expenses and delays associated with replacing certificates. Shares deposited in brokerage accounts are registered in the name of the brokerage firm and held by the firm, reducing the participants' liability and the risk that the certificate will be damaged or misplaced. When participants eventually sell their shares, the sale is more efficiently executed if the shares are already deposited in their brokerage accounts.
