Employee Stock Purchase Plan (ESPP)
Overview
Upstart's Employee Stock Purchase Plan provides eligible employees the opportunity to purchase Upstart stock at a discount through payroll deductions. Eligible employees choose if they want to participate and how much to contribute up to 15% of their base salary. Contributions are deducted from each paycheck over a set number of months called an "Offering Period." At the end of the Offering Period your contributions are used to purchase shares of Upstart stock. The price you pay equals 85% of the lower of the stock's value on the 1st day of the Offering Period and the Purchase Date.
Offering Periods
Offering periods will be six months and will run consecutively as follows:
- February 15 - August 15
- August 15 - February 15
Eligibility
Full time employees that were hired prior to the beginning of an offering period
Enrollment: The enrollment windows is typically about two weeks and commences about three weeks prior to the beginning of an offering period
- If you are not currently enrolled in the ESPP:
You will have the opportunity to enroll and elect a contribution amount during the open enrollment window. - If you are currently enrolled in the ESPP:
Your current contribution amount will apply to the next offering period, you do not need to take any action.
You will be able to make changes to your contribution amount during the open enrollment window.
Contribution Deductions Through Payroll
Eligible Upstarters can contribute between 1% and 15% of their base salary.
Withdrawal
You can withdraw from the plan and have your contributions refunded to you during the offering period as long as you do so before the cut off date before the purchase date within your Charles Schwab account.
Contribution Rate Changes
You are allowed one change to your contribution rate during the offering period. You may only decrease your contribution. There are no increases to your contribution rate allowed during the offering period.
Purchase Date
Shares are purchased on your behalf using your contributions from the offering period on the last day of the offering period at the purchase price. The purchased shares through ESPP will be deposited to your Charles Schwab account as soon as administratively possible following the purchase date.
Purchase Price
We offer a 15% discount so shares are purchased at 85% of (a) the lower of the UPST closing price on the first date of the offering period OR (b) the UPST closing price on the last date of the offering period (purchase date).
Qualifying vs. Disqualifying Dispositions
Qualifying Disposition: Sell shares at least two years after beginning of the Offering Period and one year after purchase. Gain will be taxed in two pieces:
The 15% purchase price discount is generally treated as ordinary income
Any additional gain may be considered long-term capital gain
Disqualifying Disposition: Sell shares earlier than two years from beginning of Offering Period and one year from purchase date:
The total discount on purchase date is treated as ordinary income
Short Term capital gains rules apply to post purchase value increases
$25,000 IRS Limit
To learn more about the ESPP $25,000 IRS limit click here.
Educational Resources
You can find more information about stock administration here.