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Ten Minute Guide to Employee Stock Option Purchase Plans by Ken Little

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Chapter 13. Employee Stock Purchase Plans

In this lesson, you will learn about employee stock purchase plans (ESPPs).

Not an Option, but Close

Employee stock purchase plans offer workers the opportunity to buy company stock through a payroll deduction plan, often at a discount.

Employee stock purchase plans are a popular way for companies to reward employees with stock on a tax-favored basis. In many ways, ESPPs are like incentive stock options, but with some big differences. Although there is no actual "option" involved, companies consider ESPPs a very similar form of compensation. The option is whether to participate or not.

Caution

Employee stock purchase plans (ESPPs) and employee stock ownership plans (ESOPs) are not the same. ESOPs are qualified ...

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