What an ESPP Is and Why It Matters

In this lesson, Professor Nathan Ward introduces the basic structure and purpose of an Employee Stock Purchase Plan, or ESPP. Learners will understand how an ESPP lets eligible employees buy company stock through payroll deductions, often at a discount, and why that benefit can be financially meaningful.

The lesson focuses on the foundational vocabulary and mechanics: offering periods, purchase periods, purchase dates, discounts, contribution limits, and the difference between qualified and nonqualified plans at a high level. It also frames the key strategic question for the rest of the course: when is ESPP participation a smart opportunity, and when can it create risk?