There was a time when partaking in the ESPP was a no-brainer. An immediate and minimum profit of 15% off the lower of the two semi annual corporate purchase opps. Those days are long gone. An employee comp perk that is no longer. Options are a close second in complete failure. The market is always a risk but nike stock has become one of the worst investments one can make (going back at least 3-4 years) and with no end in sight. Sad to be a shareholder. And to be an employee who relied on these benefits as part of their overall comp package.
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Great. Now discount your hypothetical gain a couple of points to reflect the delta between share price on award date and sellable date. This math is why many simply round it down to 15%. Thought we all knew that.
Many cycles have gone by (in the last 4-5 years) where a negative dip occurred after award date; but before sellable date. Leaving you with less than 17.6% gain.
You’ll beat this following Pelosi or inverse Cramer; with access to funds throughout the period. Vs being locked in for 6 months.
For those who need remedial algebra:
1/0.85 = 1.176
If you get a 50% discount on something and sell it for full price, your return is 100%. The same logic applies here
Walk us through it.
It's funny that all you people are in the weeds about trading days and comp structures but can't do the basic math and figure out the guaranteed return on the ESPP is 18%, not 15%
Nikes a fun place to work. The campus is very pretty, most of the people are overly nice & courteous, and the pay is competitive.
I would never invest in the company. I don’t actually think that things are going to get better no matter the leader, but I’m here for the salary, benefits and good times.
To fully understand the value of ESPP you must comp it against other investments. If not for ESPP, what would you do with your money?
Not too many cycles ago, if you sold it immediately when you could; the gain was closer to 7-8% Not 15. This particular cycle there was some negative news, followed by a bizarre holding period after the award date. After calling Fidelity, they confirmed that the company (Nike) had instructed Fidelity to hold on the sellable trigger. I spent hours on hold and then additional hours of time trying to talk to as many actual reps at Fidelity as possible to cross check this. Finally getting a live rep reading the notes on the account.
Further, you have to be mindful of triggering a wash sale along the way; relative to other positions.
Many years ago your ESPP purchase was calculated at the lowest price in the period. Not just the lower of the start or end of period. This change is obviously significant. Couple this with Options purchasing moving from a 5x multiplier to a 4x multiplier… and you start to get a sense of the gradual reduction of total compensation value. Which of course would have no net effect on employee morale.
So, are ESPP a good investment at Nike? If you’re at Nike, and do some active investment management… in relatively good trading environments (like the last 8-9 months) you are well ahead of the ESPP benefit.
Has the reduction of the ESPP benefit (and many others) had an effect on the value of Nike? Most certainly. The consultants and execs that came up with these policy changes polished these ideas just enough to put wind in their own sails come annual review; to the benefit of positioning their own pockets. While alienating the most valuable resource… all of you.
I recognize the OP was touting ESPP as being a bad investment purely on reduced share price.
However, when considering the holistic impact of continued layoff cycles, reduction in total benefits (not just coming from share price devaluation), exec leadership allegations of s-xual impropriety… and a class action against them… it’s tough not to see the correlation.
Reduce benefits of employees while (allegedly) se-----y as--ulting them will reduce shareholder value… which further reduces benefits of employees… and the downward spiral continues.
You could try to write a storyline with more destruction of brand value in such a short period of time… but would be difficult. What else could Nike leadership have possibly done to have made the current situation worse?
This is why one should always negotiate/agree to a base salary that you're happy with WITHOUT assuming any extra bonus or financial incentive. Options, RSUs, Performance Bonus and ESPP are sold to employees as a total compensation package that should theoretically be a talent attraction/retention but in reality they are never a sure thing (especially at Nike these days). I do sympathize that it generally su-ks to be working at a company on the downward trend for so many years (my total compensation has dropped massively).
If the job market wasn't a total train wreck Nike would probably have to consider making the average salary increase to be more than 2-3% since the stock-based compensation is soo poor performing. Unfortunately for the workers, Nike is probably happy to have as much attrition and turnover as possible to reduce the amount of employees that will need to be paid severance in the next layoff rounds in 2026.
It’s not 15% if multiple negative trading days take place between the date of award and when it is a sellable asset in fidelity.
It’s still profitable. It’s 15% if you sell immediately…. So sell immediately and dollar cost average into an index fund, you’re welcome.
Just sell immediately after the ESPP payout. You have to pay taxes but it still comes out worth it unless the stock takes a massive dump right before the period ends.