Make the Most of Your ESPP with the Right Plan Design

Offering an Employee Stock Purchase Plan (ESPP) your employees want to participate in can be a great financial benefit to them. It also affords you the ability to attract and retain loyal employees and compete for top talent in the market. ESPPs come in many different shapes and sizes. How you design yours should align with your strategic objectives.

Take a look below at some of the necessary considerations in designing and offering a desirable program to advance your talent strategy. While specific needs can vary from one company to another, there are commonalities every company should consider when implementing an ESPP. You'll want to analyze the following key areas:

Determine what goals you need to achieve in offering an ESPP.

Employee Stock Purchase Plans can serve many different purposes. It can make you competitive in attracting and retain talent; it can increase employee satisfaction and engagement; it can even help with corporate cash flow. Understanding your goals will help you choose the right plan design.

Create a compelling compensation and benefits structure.

Your total compensation and benefit plan needs to be competitive. These days, benefits such as a 401k, health and dental are expected. Offering an ESPP with actual employee ownership can make the difference in recruiting, and retaining, the best employees.

Incorporate your culture.

Think about who you are as a company and reflect your culture in your ESPP. Is your workforce US-only, or will you have global participants? Because there are different tax implications for non-US employees. How financially savvy is your staff? What are your employee demographics? When the plan's design matches your corporate culture, you are more likely to have strong participation.

Make design decisions based on plan features.

When designing your ESPP, there are many plan features that need to be considered. Thinking about which employees will be eligible and when, defining the length of your offering period, considering purchase periods and contributions methods (such as payroll deduction, cash, flat dollar amount, percentage of pay, etc.) and whether or not you will offer a discount or match is just the beginning. Lookbacks, holding requirements, full or fractional share offering, cash dividends and reinvestments are all part of the plan features that will help you easily engage your employees. Make sure you understand them all and choose the ones best suited to your goals.

Keep your corporate benefits and obligations in mind while making plan design decision.

Consider where your company can see real benefits while fulfilling your people priorities. Designing your plan with your employees in mind is important but designing your plan with your company benefits in mind is just as critical. You need to be able to show benefits at both ends. Think about your cash flow, tax deductions, share depletion and expenses when creating the right ESPP. A successful plan means you're not only measuring and meeting company goals, but your simplifying your administration while increasing employee communication, employee participation and employee satisfaction.

It's a lot to consider. But it's the right place to start when designing your ESPP. A well-designed plan will increase your employee engagement and skyrocket participation ultimately helping you drive your business strategy and advance your talent strategy.

Need help with your ESPP plan design?

Whether you're looking to launch a new ESPP or trying to improve the value of the one you already have, we can help. Visit us at computershare.com/espp-us to learn more or fill out the form below to speak to one of our ESPP solution experts.