MATTERS THAT MATTER

Creating a more accessible equity program

An Employee Stock Purchase Plan, or ESPP, can be a valuable component to your benefits offering that allows employees to purchase company stock, often at a discount to the fair market value. An ESPP encourages your employees to feel a sense of ownership in your company and can help align employee, shareholder and company goals for success.

As employers continue to focus on offering a comprehensive and inclusive workplace benefits program, an ESPP is especially attractive as it permits their employees to participate on an equal basis, and one group of employees cannot receive more favorable rights than any other group. But because participation in an ESPP is often through payroll contributions, an ESPP could be unattractive for some lower‑wage employees.

Employers can help remove barriers that could potentially prevent employees from taking advantage of an ESPP by conducting ongoing assessments of their programs to help ensure participation across compensation levels, genders, ages, ethnicities and locations.

The National Association of Stock Plan Professionals (NASPP) offers these considerations:

  • Consider expanding the definition of compensation that can be used for ESPP contributions to include hourly workers’ overtime pay or commission‑based pay.
  • If your company’s stock prices are high, consider allowing the purchase of fractional shares to help make it easier for lower‑wage earners to participate and contribute.
  • A nonqualified ESPP might be a good solution for your company to consider. You can offer a greater discount, a contribution match or other incentives.

Talk with your Bank of America representative to discuss strategies to make the most of your equity program and engage more of your workforce.

Source: NASPP, “Is your ESPP Equal or Equitable,” April 7, 2021; “Four Ideas to Make your ESPP More Equitable,” April 13, 2021.