[thechat] Employee Share Purchase - opinions..?

Luther, Ron Ron.Luther at hp.com
Tue Dec 10 11:03:01 CST 2002

Hi Martin,

It depends.  How close are you to retirement?    ;-)

I think 'Option 2' gives you a hair more equity, (since you are playing
with the deferred tax money), but that's probably only of interest in a
long term play for value growth. i.e. Leaving it alone versus viewing
it as an 'annual bonus' to be cashed in as soon as possible.

[Contrarian Ron: Then again, cashing it in as soon as possible leaves
you free to reinvest the 15% gain in 'better' opportunities ... ]

Personally, I dislike keeping accounting records ... so I usually
go with 'option 1' since it's a lot simpler for poor folks like me.

Example - play out 'option 2' seven years down the road ... now you
want to sell "x" shares.  You not only need to prove that all "x" of
them are more than 3 years old, but you also have the fun of computing
the net gain/loss.  Yuck!  [The phone company used to have paper
worksheets to help you through these calculations.]

<warning - sunny optimism ahead>
Then again, there should be much better automated tools available
today for tracking these kinds of things - so hopefully the choice
would be transparant to you and you can pick whichever you like.

Of course, it goes without saying (and I'm sure I'm not the only one
here who can attest to this) that one 'Sept 11th' event can tank
all of your tech stock holdings at any time ... making the choice
somewhat moot.

(Who just cashed out his ESPP shares from a previous employer ...
and may have done at least as well stashing the cash under the mattress
for the last 8 years.)    ;-(    Oh well, I'm sure 'the wife' (TM) will
find a nice investment property for me to throw the remains into that
should do much better ... if I'm nice to her!   ;-)

-----Original Message-----
From: Martin Burns [mailto:martin at easyweb.co.uk]

1) get a 15% discount on the trading price on the day of purchase (ie
payday) or the offer price (whichever's the lower), paid out of post-tax

2) Buy the shares from pre-tax (gross) income at normal trading price and
get additional matching shares equivalent to a 15% discount, but there's a
lock-in of 3 years before I can really sell them without costing money.

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