Trending @Accenture; Accenture Employee Share Purchase Plan (ESPP) details
Accenture offers qualified employees a 15% discount on shares purchased through its ESPP program. Employees can contribute up to 10% of their total compensation, accumulating for six months until the stock is purchased.
The ESPP contributions max out at $15,000 or $7,500 per each ESPP period.
You need to enroll in the program before the set start dates. After that, you elect after-tax contribution between 1%-10%, which accumulates in a separate account until the six-month period ends in either May or November.
The ESPP purchase price is the stock’s average price on the last day of the ESPP cycle. The amount accumulated is used to purchase the shares based on that average stock price.
Based on my experience with the ESPP, it takes a few days for the stock to purchase and show up in the Morgan Stanley account.
After the stock shows up, employees can sell the shares whenever they’d like or hold onto them in the Morgan Stanley account.
As mentioned earlier, there’s one change that occurred after Accenture started the program in 2001. They previously offered a 15% discount on the stock price from either the first day or the last day of the ESPP period.
However, now they only provide the discount based on the stock price at the end of the period.
Your investment return is more than 15%! While it seems clear you’re receiving a 15% return from the ESPP program, you’re receiving an even higher return. That’s because 15% is a discount on the purchase price.
Let’s go through an example:
Let’s say you contribute $6,800 per year in the Accenture ESPP program. After each six-month contribution period, you’ll have $3,400 to purchase stock.
If the stock is trading at $200 per share, your discounted purchase price is $170 per share, so you’ll receive 20 shares.
Your shares are actually worth $200, which means your total value is now $4,000 for a 17.6% return ($600 / $3,400)!
You’ll have to pay ordinary income taxes on the $600, but it’s still an excellent return. It’s even better when you factor in the amount of time it takes to receive the return.
As the length of your contributions ranges from 6 months to just a few weeks, receiving a 17.6% return for the money you only invested a few weeks ago is massive!
