Employee Stock Purchase Plan (ESPP) Administration

An employee stock purchase plan (ESPP) is a broad-based stock plan that allows participating employees to purchase stock in their company often at a discount. A successful plan can help employers recruit, reward and retain talent, as well as build financial wealth for employees.

Many factors contribute to a plan’s success – and administration is one of the biggest components. In this article, we’ll spell out:

• What is ESPP administration?
• How to administer your ESPP?
• Our ESPP Administration Solutions for admins
• Our ESPP Administration Solutions for employees

What does a job in ESPP administration involve?

ESPP administration is the process of implementing, tracking and managing employee stock purchase plans in a company. It involves input from internal and external parties.

When implementation commences, an ESPP administrator will draft a plan with suggested plan ideas and make suggestions to improve the participant experience and enrollment rate. It’s then followed by a series of activities, including enrolling employees in the plan, tracking and reporting changes in ownership, managing participants’ contributions and purchases, communicating with stakeholders and the board of directors, updating policies/procedures, and staying compliant based on each region your employees are based in.

Not only are Legal, Finance and HR teams required to input in this process, but also multiple third-party providers – law firms for setting it up, brokers for the trading element and tax professionals to tell you what the requirements are from region to region.

So, an ESPP administrator is required to understand the extensive accounting, tax, legal, and securities regulations governing an ESPP.

Breaking ESPP administration down

ESPP administration is a complex process. Here, we break it down into seven major components for you and your team to consider:

1. Gather all the necessary employee data:
   It encompasses all details of eligible employees for the plan enrollment, including demographic details. It’s important to do it by the strict data protection rules.
2. Set up ESPP plan:
   Things to consider include the type of your plan (e.g. Global ESPP, Qualified ESPP, Non-qualified ESPP), plan duration, plan withdrawal method, offering period, FMV at the offering period start date, purchase period, discount (%) for the purchase price and matching equity (if any).
3. Track activities, e.g. enrollment, purchase, withdrawal, change in plan contribution and a lot more
4. Deal with multi-office locations:
   An ESPP can be launched in multiple countries to boost employee ownership and connect staff across the world as a corporate glue. That also means you will need to regularly review and monitor federal, state and foreign regulations along with securities laws for each jurisdiction from gathering data to designing a plan and administering it.
5. Handle reports, e.g. enrollment, contributions, taxes, payroll and so on
6. Communicate with participants, internal and external parties
7. Mobile workforce:
   Communication and compliance get even more complicated when employees move across locations, e.g. A mistimed move may put your employees in a situation where they have to pay more tax or they can’t get benefits of a tax-favorable plan.

How to administer your ESPP?

There are two main approaches to administering an ESPP – Manual and Automatic.

We’ve seen that companies continue to use a spreadsheet to manage their ESPP manually until they realize that the approach can’t keep up with the demands of their expanding business. While a spreadsheet might be a possible approach when you’re starting out, why not make it right at the start by using a scalable method?

Automated ESPP administration software can mitigate the risks associated with manual processes, such as the danger of human errors and multiple versions of the document circulating among internal colleagues. It also scales with your company as your business and ESPP plan grow. Better still, if you work with an ESPP provider that offers both technology and equity knowledge, you’ll make the most out of the employee ownership.

Take a glance at the differences of these two approaches:

11 ways our ESPP administration solutions could benefit you

Our ESPP administration solution combines industry-leading technology with our vast ESPP knowledge and extensive experience in daily plan administration, day-to-day transaction processing and participant management.

1. Smart and ever-evolving technology along with a team of experienced experts
2. Excellent human support: Includes a dedicated client manager, stock plan analyst team and client service desk etc
3. Quick onboarding: Whether you’re starting or switching, we set up your plan seamlessly and efficiently. On average, our onboarding process is completed in eight weeks or less.
4. Ease of ESPP administration: 24/7 real-time online access without a steep learning curve
5. Automation of key administrative tasks: You won’t need to manually track purchase periods, calculate purchase prices or send emails to remind participants of key dates etc.
6. Global ESPP: We help you operate the plan for participants in numerous countries in one seamless system.
7. Empower your employees with an easy-to-follow fully personalized secure online participant portal. This engaging portal allows them to view and manage their ESPP shares to further reduce your workload.
8. Customized reporting: Financial & business intelligent reports in various types, e.g. tables, charts, data maps etc. at the click of a button
9. Interface customization: Incorporates company logos and tailored-to-match fonts, colors, layout, and aesthetics of your corporate requirements.
10. Enhanced security: Supported by a team of in-house cyber security and IT professionals
11. Improved functions & features in a regular basis without any need for input from your IT team

What’s more – Our ESPP Solutions could benefit your employees too

Giving employees online access to their ESPP holdings is critical to helping employees understand how an ESPP works. It increases plan participation as well as allows employees to transact with ease on their purchased and matching shares.

Capitalizing on a participant portal, your ESPP administration work can be simplified. Here are some key features our participant portal can offer:

1. Engaging & intuitive participant portal: 24/7 real-time online access to allow employees to enroll in and view the plan, as well as withdraw, suspend and change their ESPP contribution
2. Easy trading: Allows participants to submit sale orders and external transfer requests within open trading windows set by your company
3. Mobile app: Gives your mobile and on-the-go participants the ability to access their equity anytime, from anywhere
4. Multi-lingual & multi-currency interface: Optimizes employee’s experience
5. Participant help desk: 24/5 human support to reduce stock plan administrative workload.
6. Self-learning library: e.g. Videos, FAQs, Tax guides, ESPP Calculators for modeling purchases and more
7. Other resources: e.g. downloadable ESPP contribution and purchase statements, contracts, policies and more
8. Fully branded portal: Consistent with your company’s brand, language, ethos and corporate identity.

Contact Us

At J.P. Morgan Workplace, our ESPP solutions are designed with four key factors in mind; Accuracy, Security, Efficiency and Comprehensiveness.

Understanding that your business has its own unique priorities and requirements, these four components provide a solid foundation for your ESPP needs.

We would be delighted to discuss or demo our ESPP Software with you in more detail.

Request a Demo