# Employee Stock Purchase Plan (ESPP)

*Retirement & Benefits — Finicade finance glossary*

An ESPP lets employees buy company shares at a discount, typically 15%, often with a lookback that applies it to the lower of two prices.

An ESPP lets employees buy company shares at a discount, typically 15%, often with a lookback that applies the discount to the lower of the price at the start or end of the offering period. That combination produces a very high annualised return if you sell immediately, which is why participating and selling on day one is the standard advice — holding converts a compensation benefit into a concentrated equity bet.

**Also known as:** ESPP, share purchase plan, SAYE

**Related terms:** [Employee Stock Options](https://finicade.com/glossary/employee-stock-options), [Restricted Stock Units (RSUs)](https://finicade.com/glossary/restricted-stock-units), [Concentration Risk](https://finicade.com/glossary/concentration-risk), [Capital Gains Tax](https://finicade.com/glossary/capital-gains-tax), [Vesting](https://finicade.com/glossary/vesting)

Source: https://finicade.com/glossary/employee-stock-purchase-plan