An Employee Stock Purchase Plan (ESPP) provides a way of increasing the number of shareholders in a company. Allowing staff to buy shares boosts company morale and encourages staff to remain loyal to their employer. The number of shares purchased by employees usually depends on the number of shares offered at the end of the year. For example, an employer may decide to offer 10 percent bonus shares at the end of 2018 as a promotion for its business.Some companies also choose to run this scheme throughout an entire financial year:—for example, allocating all shares earned during that period toward employee purchases. This way, employees can earn more stock over time and are incentivized to stay with their company long enough for this to happen. At the end of each year, all purchased shares are available for sale on the open market at no cost or any desired price— and this increases company revenue through increased share ownership.Evidently running an ESPP is beneficial for both employers and employees due to increased staff loyalty, as well as reducing expenditure on capital goods by not paying full value for new stock offerings from investors or shareholders.Additionally, sharing profits generated by investment in employee stocks encourages greater staff retention. Therefore, large companies — such as Walt Disney Parks & Resorts — have been running their own ESPPs for decades in order to increase shareholder wealth while encouraging staff loyalty and investment in their businesses via investment in new equipment or expansion plans.
