2023 Shell GESPP

Full Transcript:

The Shell employee stock purchase program had another great year. Let’s talk about what that means for you.

First, let’s start with the basics for the Shell group employee stock purchase program. In 2023, you can contribute up to $5,954 into the GESPP program. You then get a 15% discount off of the lower of the closing price of either the first trading day of the year, or the first trading day of the following year. In this case, the stock went up throughout 2023. Therefore you get 15% off of $55,98, so you purchase your shares at a price of $47.58 per share. Now, if you maxed it out at $5,954, you will receive 125 shares at a purchase price of $47.58 per share.

Now the stock is currently worth $65.91 per share, so you have an immediate gain on your 125 shares of $2,291. Now, although many people think this can be a capital gain, unfortunately, the IRS sees this discount and immediate gain as income and realizing this is a taxable event. Therefore, Shell will withhold shares for your taxes. The exact amount that Shell withholds will depend on your individual tax situation. But for this example, we’re going to assume that they would hold ten shares.

Therefore, you are now left with 115 shares, and at a price of $65.91, you have $7,580 worth of Shell stock. Now, there are a few important considerations to make. First, as this gain was a taxable event, this $65,91 per share is your cost basis. This is really important that you enter this proper early into your tax return the year after you sell these shares so you are not overpaying the IRS.

Second, you need to decide what to do with $7,580 worth of Shell stock. Now we’re going to assume that the current market price is pretty close to the $65.91. And if that’s the case, taxes shouldn’t be a major consideration for deciding whether or not to hold it or sell it. Instead, you should look at “Does $7,580 fit within my investment portfolio?” So, one way to look at this is if you did not have this Shell stock but instead, you had $7,580 in cash, would you go out and buy Shell stock with that money? How you answer that question should help you determine whether or not you want to hold or sell this Shell stock.

I hope you found this video helpful, and if so, I encourage you to share it with your coworkers to help them out as well.

Source: Shellshareplans.com and https://microsites.computershare.com/Shell/PDF/GESPP_Plan_Guide_ENGLISH.pdf