ESPP (Employee Stock Purchase Plan)
What is an ESPP? Employee Stock Purchase Plan Explained
An Employee Stock Purchase Plan (ESPP) allows employees to purchase company stock at a discounted price (usually 5-15% below market) through regular payroll deductions.
ESPPs work in offering periods (usually 6 months). Your salary deductions accumulate, then shares are purchased at the discounted price. Some include a "lookback" feature applying the discount to the lower price at the start or end of the period.
ESPPs are most common in publicly traded US companies. They're different from stock options because there's no exercise decision and no vesting period. You simply buy shares at a discount through payroll.