Company stock

[jIMOh]

Anyone here use an ESPP or similar as part of accumulation? My company is offering a 33% match on all company stock purchased in next 2 months. Not sure how much I should take advantage.

Meaning for every 3 shares I buy, company will match one share in 3 years (I have to hold for all 3 years to get the matched share). I also have to be employed by company in 3 years to get that match.

I am thinking of sending around $2000 into this, delaying 2009 Roth contributions to get the stock. Our Roth contributions are $500/month (per spouse), so instead of contributing Jan-Oct, we would do Feb-Nov (still maxed at $5000 each).

Also have an 11% 401k contribution I could adjust downward for 2 months to acquire more. I am usually just inside the 15% tax bracket come tax time.

Stock is a good one- pays more than $2.00 dividend on share price of around $60. The purchase price locked in actually gives me a $6 gain (11% gain) relative to closing price today (Thursday 12/4).

Market cap is more than $50 billion. mega-mega corp if you will.

 

[samclem]

I'd probably take the deal if the company appears basically sound--it's free money. Put in whatever you wouldn't feel terrible losing. At 3 years and one month I'd be selling the shares putting the $$ into my diversified AA. I'd never let more than maybe 5% of my portfolio accumulate in my company's stock--regardless of what I thought I knew about it's bright future.

 

[Animorph]

As long as that is not too much of your portfolio it sounds decent enough. You probably won't be getting any dividend on that added share until they actually give it to you, so there is some discount in present value there. With a current discount and an expectation of a rising market one of these days the only problem is the 3 year holding period. My poor old tech job never seemed to last that long, with the company or group I was in getting sold every year or two. Make sure you won't be forced to sell if you are layed off and see if you get your share (maybe early) if the company is sold.

 

[lucija]

<snip>
Meaning for every 3 shares I buy, company will match one share in 3 years (I have to hold for all 3 years to get the matched share). I also have to be employed by company in 3 years to get that match. <snip>

It strikes me that 3 years is a very long time to wait... Why is this deal being offered only in the next 2 months? What is the standard deal, if any? Could this be an attempt (by a company in trouble) to raise capital? Can you sell the shares you do own at any time (and cut your loses, if any) or are there limited trading windows? What if the share price takes a dive sometime in the next 3 years?

For what is worth, you should probably know I put little trust that a given company will "do business in my best interest" (based on personal experience). If I did this, I would commit a relatively small amount of money to this venture.

Edit - I forgot to mention, I have participated in ESPP in the past. Our set-up was different, we were able to buy at a 10-15% discount and could sell after 6 months. I thought that was a pretty good deal.

 

[Alan]

If you can afford to lose $2K then it is probably something I would do. Even mega mega corps have their share price go to cr*p, so as long as you do this with the knowledge it is speculative and you can afford it, then go do it.

 

[jIMOh]

It strikes me that 3 years is a very long time to wait... Why is this deal being offered only in the next 2 months? What is the standard deal, if any? Could this be an attempt (by a company in trouble) to raise capital? Can you sell the shares you do own at any time (and cut your loses, if any) or are there limited trading windows? What if the share price takes a dive sometime in the next 3 years?

For what is worth, you should probably know I put little trust that a given company will "do business in my best interest" (based on personal experience). If I did this, I would commit a relatively small amount of money to this venture.

Edit - I forgot to mention, I have participated in ESPP in the past. Our set-up was different, we were able to buy at a 10-15% discount and could sell after 6 months. I thought that was a pretty good deal.

We have no ESPP or similar.
Short window is based on a fixed purchase price from mid november. Stock is currently up 11 percent from that date (SI is ticker).

2k would be about 1 percent of my overall portfolio right now, about 18 years until I could FIRE at the earliest.

 

[lucija]

Well, this sounds like this is a pretty decent one-time deal. As long as you think your company is in good standing, I would probably go for it... It also sounds like you are free to pull out (and forfeit the match) at any time within the 3 years. However, I would not want this to amount to more than 5% of the overall portfolio. I hope this works out for you. ESPP, while we still had it, did wonders for us...

 

[CCdaCE]

The cynic in me says, "want to help us dilute the company stock? -- we'll pay you back in those diluted shares". Sounds like a good deal, best case scenario, but a lot can happen in 3 years, plus all of the other caveats that have been mentioned above.

-CC