Define: Employee Stock Purchase Plan

Business, Legal & Accounting Glossary

Definition: Employee Stock Purchase Plan



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Full Definition of Employee Stock Purchase Plan


An Employee Stock Purchase Plan gives an employee the opportunity to purchase stock in the company where they work. Many companies offer an Employee Stock Purchase Plan and encourage employee participation. An Employee Stock Purchase Plan may be part of a qualified retirement plan or simply be a benefit offered by the company. The share purchase price for purchases through an Employee Stock Purchase Plan can be as much as 15% below market price. In addition, many companies offer a lookback provision. In this type of Employee Stock Purchase Plan, if the stock price increases during the plan offering period, Employee Stock Purchase Plan participants buy shares at the lower price from the beginning of the period. The typical Employee Stock Purchase Plan also offers favourable tax treatment. No income is reported when shares are purchased for an Employee Stock Purchase Plan even if shares are acquired below market price. In addition, an Employee Stock Purchase Plan is not subject to the alternative minimum tax. The typical Employee Stock Purchase Plan requires employees to sign up by a particular date then withholds money from their paychecks for stock purchases.


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Employee Stock Purchase Plan. PayrollHeaven.com. Retrieved April 10, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/employee-stock-purchase-plan/

Definition Sources


Definitions for Employee Stock Purchase Plan are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 9th February, 2020