An employee stock purchase plan (ESPP) can offer a wealth of benefits to both the company and its employees. An ESPP is a versatile, cross-border benefit that can be extended to employees in every location worldwide, making it one of the few benefits with such universal accessibility. For most companies, building an employee-centric, high performing culture is crucial to achieving its strategic goals. Implementing an ESPP can significantly contribute to your company’s success. Read on to discover the key benefits that both your company and employees can gain from offering the right plan.

Attract and retain top talent

While many companies provide standard benefits like 401(K) plans and medical insurance, these have become baseline expectations for top employers. However, offering an ESPP could be the deciding factor in attracting top talent. Surprisingly, not all companies offer ESPPs, making it a unique and attractive perk.  

Employee ownership culture delivers high-performing teams

An ESPP is one of the simplest and most cost-effective methods for employees to acquire shares in the company. When employees are share owners, they have a greater stake in the success of the company, which can be a powerful motivator. Employees who participate in their company’s ESPP make a personal financial investment, which has been shown to increase their commitment to the company’s success. These employees tend to be more engaged, less likely to leave, and express higher job satisfaction.

Raising capital

Raising capital is an important part of supporting your business growth strategy. Perhaps your business plan includes expanding organically or through acquisitions. You might be planning a major technology overhaul or launching a new business line soon. Having access to capital ensures you’re prepared for all possibilities. Regular payroll deductions from ESPP participating employees provides a steady, consistent, and simple cash flow to the company.

Cost-effective employee compensation

On a per share basis, ESPPs generally have a lower valuation than other forms of equity compensation. By setting limits on share purchases, you can also reduce compensation expenses. This benefit makes it easier to report on the ROI of your plans, simplifying cost justification and future budget approvals. Additionally, offering an ESPP instead of an employee discount, where appropriate, could save your company hundreds or even thousands of dollars per employee.

Corporate tax deductions

If your company offers a discount on ESPP purchases, it may be eligible to take a corporate tax deduction on the income recognized. Income recognized from disqualifying dispositions of Section 423 plans and discount purchases from non-Section 423 plans should be reported on the employee’s W-2 to ensure proper qualification. Whether you currently administer an ESPP or are considering expanding your employee compensation package to include one, it’s crucial to understand the benefits and collaborate with a partner who can effectively manage your plan seamlessly across the globe.

Ready to experience the Computershare difference? Contact us today.