I start in January & I know Cisco offers an Employee Stock Purchase Plan for blue badge employees. How does this work exactly? How do I maximize its benefits?
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If you're currently employed and haven't put in your notice yet, you should think seriously about declining Cisco's offer. This is not a place where you want to be.
Do yourself a favor and find a better company. This is not the place to get your hopes up for, irrespective of whatever People Deal BS you've been told.
And if you dont know what the people deal is, it's basically a manifesto of corporate psychobabble attempting to describe the culture at Cisco- which doesn't even come close to the arrogant, egotistical, condescending a$$holes that work there in leadership.
Now if you like to kiss up, make work and do everything possible to over-complicate things, then this is the place for you.
Tread lightly
No it's not, it's 9.89% profit.
No, but buying a car at $9100 and selling it at $10000 is 10% profit.
Math boy, you're a cretin. So buying a $10000 car for $9100 is a 10% discount?
And the best part, when you DO get laid off, any monies you had paid into the ESPP since the last purchasing of shares will be refunded to you.
Can't stop laughing at the mathtard. Seriously?
To the OP, all you need do is put 10% in per month. It pays out every 6 months (July and January). The starting price gets frozen and resampled sometimes so the chances are that you'll do better than 17.6% return if the price goes up. You can't lose.
It's effectively a guaranteed pay rise of at least 1.7%, could be more. And your bonus counts as well.
15% discount does not equal 15% gain. Assuming company stock is at 100 and never changed. It's always at 100 before during and after the period. Then The gain when you sell at 100 is 17.6%. If you don't understand this and you're in finance or engineering you owe it to your fellow employees to resign immediately.
I stand by my earlier comment. You aren't making a 17.6% profit. You're getting 17.6% more shares than you would have if you'd purchased w/o the discount. But that's not profit. Profit is the difference between the selling & buying prices. Only when Cisco is in a long-term slide, or remains flat, does it work out your way. If Cisco is climbing, then the profit is variable & based on how much growth has occurred. I've had times where I could sell my ESPP stock for twice what it was purchased at. That's a 100% profit, not considering taxes.
Best of luck with your new Cisco career OP. The advice others have given you below is the best way to make some profit out of ESPP. Its a pretty good benefit overall even after taxes. The other benefit of joining Cisco is the huge increase in strength of your neck muscles from constantly looking over your shoulder.
Math class follows. If I have $1000 and the current share price is $30, and I'm buying at a 15% discount...
So I pay 85% of the current price. That means I can buy (1/0.85) more shares. =1.176.....
Then I sell the shares. What profit did I make? That's right, it was about 17.6%.
Carry on, math fools, and I hope you're not working in Finance.
+d before somebody replies with an English teaching proposal...
Give me the 2.6% an I will teach you maths...
You probably do not last to see your ESPP vested. Good luck.
ESPP is 100% vested at time of purchase. Most employees do NOT get LR'ed in less than 6 months. Whether or not the OP gets to make more than one round of ESPP purchases is another question. Good luck to the OP. Learn all you can while you're there.
For all those who think you make a 15% gain on ESPP please send me your unwanted 2.6%
15% is the minimum gain. How did you come up with a 17.6% gain? Given how every six months has a different close price, each ESPP period has a different gain, assuming you sell immediately, so saying that it's 17.6% is not accurate.
You probably do not last to see your ESPP vested. Good luck.
For all those who think you make a 15% gain on ESPP please send me your unwanted 2.6%
ESPP enrollment happens before the 6 month period, which runs Jan 1 - June 30 and July 1 - Dec 31. If you're starting in Jan, most likely you won't be able to enroll in ESPP until late May or early Jun for the July-Dec period.
They'll withhold whatever percentage you select from each pay period until the last day of the ESPP period and make a purchase at a 15% discount of the lower of the closing price of the first day or the last day of the 6-month ESPP period.
Some companies treat each 6-month ESPP period as a new one and the purchase price is always the discounted price of the lower of the start or end date's closing price. Cisco started something where the lower price was set after your first ESPP window and stayed for x number of ESPP windows unless the stock price went below that "low water" level. I don't recall the details any longer and no longer have access to the plan details.
You should enroll at the earliest opportunity and take advantage of your 15% discount. Whether or not you immediately sell them or hold them for 18 months and go for long-term capital gains is up to you. I'm holding mine for now, but once the slide starts, I'll dump them to preserve my gains. I have a bunch from Cisco's $12-15 days.
It's simple. ESPP shares are bought every 6 months, so just figure out how much (%) of your salary you want to withhold each paycheck to participate. And you can sell immediately after they are bought and make 15% (the discount), but you'll pay short term tax gains.
Why dear god did you accept the position? Were you desperate?