This plan provides a way for you to purchase Waters stock at a discount from its current value. (The type of stock you can buy is officially known as “common stock” – the sort you can buy on the stock exchange.)
Here’s how it works:
If you want, you can automatically put aside from 1% to 15% of your eligible pay, per paycheck. (These payroll deductions are made after taxes have been taken out.) At the end of each calendar quarter, your contributions will be used to purchase shares of Waters stock.
The cost of the stock will be either:
- 90% of the fair market value on the first day of the trading quarter
Or, if it’s lower…
- 100% of the fair market value on the last day of the trading quarter
That rule ensures you’ll never pay more than the fair market value of the stock.
Hannah is making $45,000/year now. She sets aside 5% of her pay, every paycheck, toward the Employee Stock Purchase Plan. And that means when the quarter ends, she’s saved up $562.50.
To see how much the stock costs to buy, Waters looks at two dates:
- On the first day of the trading quarter, Waters stock was 122.67. (And 90% of that would be $110.40)
- On the last day of the trading quarter, Waters stock was up to 123.04.
Since $110.40 is less than $123.04, the stock price is set at $110.40 per share for Hannah (and anyone else in the ESPP).
Now, if the stock happened to go down a bit during the quarter, and the stock was only with $109.85 on the last trading day, Hannah would only pay $109.85 per share, since that’s less than $110.40.
You can enroll at the first month of any quarter, from the 1st to the 15th of that month. The quarters begin in March, June, September, and December. Watch for the reminder email each quarter.