2022 GESPP Results Breakdown:

Full Transcript:

The Shell Employee Stock Purchase Program had another great year. Let’s talk about what that means for you.

First, let’s cover the basics. In 2022, you can contribute up to $6,943 into the Shell GESPP program. You then get a 15% discount off of the lower closing price of either the first trading day of last year or the first trading day of this year. In this case, the stock went up, so you get 15% off of $44.64, meaning that you purchased the stock at $37.94 per share.

If you maxed out your contribution at $6,943, you will end up with approximately 182 shares at a purchase price of $37.94 per share. Now you have an immediate gain of $3,283, as you have 182 shares, but those shares are worth $55.98 per share. Many people think that this is a capital gain, but unfortunately, that’s not the case. The IRS considers this as income, and therefore, Shell will withhold some shares for taxes. The exact amount they withhold depends on your specific tax situation. But for this illustration, let’s just assume that they withhold 20 shares for taxes. That means you are now left with 162 shares at $55.98 per share or about $9,000. Still a really good after-tax return, especially in 2022.

Now there are two considerations that you’ll want to make. First, you want to understand that this $55.98 is your cost basis. That is how much you have already paid taxes on those shares. So when you go and sell these shares, you want to make sure this is reported correctly when you file taxes. Otherwise, you will overpay the IRS.

Second, you want to understand what do I do with $9,000 worth of shell stock? You can either keep it or sell it. Now, since the current market price is pretty close to your cost basis, taxes should not be the primary consideration when deciding whether or not to keep or sell the stock. Instead, you want to ask yourself, If I didn’t own this stock, and I had $9,000 in cash, would I go out and buy $9,000 of Shell stock? The way you answer that question should determine whether or not you keep or sell the stock.

I hope you find this video helpful, and I hope you share it with your other coworkers that you may think find it helpful as well.

Disclosure:

This video is for informational purposes only and is not intended as financial, tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. This communication should not be relied upon as the sole factor in an investment making decision.

New Heights Planning is not endorsed by nor affiliated with Shell.