Employee Stock Purchase Plan (ESPP)
A program letting employees buy company stock, often at a discount, through payroll deductions over a set offering period.
Quick Answer
How much of a discount can an ESPP legally offer under a qualified plan?
Under a tax-qualified §423 plan, the maximum discount is typically 15% off the lower of the stock's price at the start or the end of the offering period, subject to specific IRS contribution and holding-period rules.
- The 15% maximum applies to tax-qualified plans specifically
- The discount applies to whichever price point is lower
- Holding-period rules affect the eventual tax treatment on sale
The Lovie Advantage
Lovie can track ESPP participation alongside options and RSUs, keeping every form of equity compensation on one record.
See how this connects to Right of First Refusal (ROFR). For the formal definition, see the National Venture Capital Association's model legal documents.
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