Aaron Shapiro’s quest to rethink employee stock purchase plans began with a startling insight: If only his mother had participated in one, she’d be a millionaire today.
Many companies let employees buy shares at a discount, but few take advantage of the benefit, either because they don't understand how it works or can't afford to set aside money.
Shapiro’s eureka moment prompted him to found Carver Edison, a New York City-based fintech startup that provides interest-free loans to workers unable set aside money from their paychecks to buy stock on the cheap. Workers who opt into ESPPs agree to set aside part of every paycheck to buy company shares on preset dates, usually every three or six months. The shares are bought at a discount of as much as 15% to the market price at the start or end of each period, whichever is lower.
Some workers may opt out because they don’t understand the plans, like Shapiro’s mother, or prefer being paid upfront rather than deferring it for a future benefit. But the biggest barrier is that many simply can’t afford to set aside the money, according to Jon Burg, the practice leader of Aon’s equity compensation advisory group.
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