Employee Stock Purchase Plan (ESPP) - Building Ownership

Building Ownership Through BetterHealth's Employee Stock Purchase Plan

One of the unique benefits BetterHealth offers is the opportunity for you to become a shareholder in the company you help build every day. Our Employee Stock Purchase Plan (ESPP) allows you to purchase BetterHealth stock at a significant discount through convenient payroll deductions. This guide explains how the program works, why it's valuable, and how you can participate.

What is an Employee Stock Purchase Plan?

An ESPP is a company-run program that allows employees to purchase company stock at a discounted price. It's one of the easiest ways to start building equity and wealth, especially when your company offers a generous discount like BetterHealth does.

The magic of an ESPP is that you're essentially getting an instant return on your investment. With BetterHealth's 15% discount, you're immediately ahead before the stock even has a chance to grow in value. For many employees, participating in the ESPP has been one of the smartest financial decisions they've made.

BetterHealth's ESPP Program Overview

Here's what makes our ESPP attractive:

15% Discount

You purchase BetterHealth stock at 15% below the market price. This isn't just any discount—it's calculated in a way that can sometimes result in even greater savings through what's called a "lookback provision." More on this below.

Flexible Contribution Levels

You can contribute anywhere from 1% to 15% of your base salary toward the ESPP through payroll deductions. This flexibility means you can participate at a level that works for your budget, whether that's $50 per paycheck or $500 per paycheck.

Semi-Annual Purchase Periods

The ESPP operates on six-month purchase periods, with stock purchases happening twice per year:

• First Period: January 1 - June 30 (purchase date: June 30)
• Second Period: July 1 - December 31 (purchase date: December 31)

Eligibility

All regular full-time and part-time employees are eligible to participate after completing 90 days of employment. Once you've been with BetterHealth for three months, you can enroll during the next enrollment window.

How the ESPP Works: A Step-by-Step Example

Let's walk through a concrete example to show how powerful this benefit can be:

Your Situation:

• You earn $60,000 per year ($5,000 per month)
• You elect to contribute 10% of your salary to the ESPP
• That's $500 per month, or $3,000 over the six-month purchase period

The Purchase Period:

• January 1 (period start): BetterHealth stock is trading at $100 per share
• June 30 (purchase date): BetterHealth stock has grown to $120 per share

Here's Where It Gets Interesting:
Because of the "lookback provision," your purchase price is based on whichever price is lower—the price at the beginning of the period or the price at the end of the period. In this case, the lower price is $100.

But wait—you also get a 15% discount on that lower price!

Your Purchase Price: $100 × 0.85 (85%) = $85 per share

What You Receive:
$3,000 ÷ $85 = 35.29 shares of BetterHealth stock

Immediate Value:
35.29 shares × $120 current market price = $4,234.80

Your Gain: $4,234.80 - $3,000 = $1,234.80 profit, or a 41% return in just six months!

This example shows how the combination of the lookback provision and 15% discount can create substantial value, especially when the stock price increases during the purchase period.

Enrolling in the ESPP

Enrollment happens during specific enrollment windows twice per year. Here's how to sign up:

Enrollment Windows

• May 1-15: Enroll for the July-December purchase period
• November 1-15: Enroll for the January-June purchase period

Mark these dates on your calendar—enrollment windows are only open for two weeks, and if you miss the window, you'll have to wait for the next one.

How to Enroll

1. Log into UKG during an open enrollment window
2. Navigate to Pay → Employee Stock Purchase Plan
3. Review the current stock price and program terms
4. Select your contribution percentage (1-15% of salary)
5. Review and confirm your enrollment
6. Payroll deductions will begin with your next paycheck after enrollment closes

Your Deductions Begin Immediately

Once you enroll, your selected percentage will be automatically deducted from each paycheck throughout the purchase period. These funds accumulate in a holding account until the purchase date, when they're used to buy BetterHealth stock at the discounted price.

Understanding Your Shares and Brokerage Account

When your stock is purchased on June 30th or December 31st, the shares are deposited into a brokerage account held at E*TRADE (or another designated brokerage). You'll receive login credentials to access your account, where you can:

• View your ESPP shares
• Check the current value of your holdings
• Review your purchase history
• Manage dividend reinvestment
• Sell shares when you choose

When and How to Sell Your Shares

You own your ESPP shares outright as soon as they're purchased. You can sell them immediately if you want (though there are tax implications—see below), or you can hold them long-term as part of your investment portfolio.

Selling Through Your Brokerage

To sell shares:

1. Log into your brokerage account (E*TRADE or designated broker)
2. Navigate to your BetterHealth stock holdings
3. Select the number of shares you want to sell
4. Choose your order type (market order for immediate sale, limit order to set a target price)
5. Confirm and submit your sale

Proceeds from the sale are typically available in 2-3 business days and can be transferred to your bank account.

Tax Considerations: Qualifying vs. Disqualifying Disposition

This is important: How long you hold your ESPP shares affects your tax treatment.

Disqualifying Disposition (Sell within one year):
If you sell your shares within one year of the purchase date, the discount you received (15%) is taxed as ordinary income. Any additional gain is taxed as short-term capital gains (also at your ordinary income tax rate).

Example: If you purchased stock at $85 (with the 15% discount) and it was worth $100 on the purchase date, that $15 per share is taxed as ordinary income. If you sell at $110, the additional $10 gain is also short-term capital gains.

Qualifying Disposition (Hold at least one year + one day):
If you hold your shares for at least one year and one day from the purchase date, the discount is still taxed as ordinary income, but any additional gains are taxed at more favorable long-term capital gains rates (typically 15% or 20% depending on your income, compared to potentially 24-37% for ordinary income).

Pro Tip: Many financial advisors recommend holding ESPP shares for at least a year to take advantage of long-term capital gains treatment. However, if you need the cash or believe the stock price may decline, it's perfectly reasonable to sell sooner.

Making Changes to Your ESPP Participation

Changing Your Contribution Percentage

You can increase or decrease your contribution percentage during the enrollment windows (May 1-15 and November 1-15). Changes take effect with the next purchase period.

Withdrawing from the Plan

If you need to stop participating, you can withdraw from the ESPP at any time by:

1. Logging into UKG
2. Navigating to the ESPP section
3. Selecting "Withdraw from Plan"

When you withdraw, your payroll deductions stop immediately. Any funds you've already contributed during the current purchase period will be refunded to you in your next paycheck—you won't lose the money you've already saved.

ESPP Best Practices and Strategy

Start with What You Can Afford

Don't feel like you need to contribute the maximum 15% right away. Even contributing 3-5% can build meaningful value over time. You can always increase your contribution in future enrollment periods.

Consider Your Overall Financial Picture

Before contributing to the ESPP, make sure you:

• Have an emergency fund (3-6 months of expenses)
• Are contributing enough to your 401(k) to get the full company match
• Have paid off high-interest debt

The ESPP is a great benefit, but it shouldn't come before these financial fundamentals.

Don't Overconcentrate

Financial advisors typically recommend limiting company stock to no more than 10-15% of your total investment portfolio. Remember, your salary already depends on BetterHealth's success—you don't want your entire financial future tied to one company's performance.

One strategy many employees use: Participate in the ESPP, capture the 15% discount and any stock price gains, then sell the shares after holding them for a year to diversify into other investments.

Track Your Tax Basis

Keep records of your ESPP purchases, including:

• Purchase dates
• Number of shares purchased
• Purchase price per share
• Fair market value on purchase date

You'll need this information when you sell shares to accurately report your capital gains and losses.

ESPP and Your Total Compensation

Don't forget that the ESPP is part of your total compensation package. The 15% discount represents real money—essentially a 15% bonus on whatever you contribute. When combined with your salary, 401(k) match, health benefits, and other perks, BetterHealth's total compensation package is very competitive.

Many employees have built substantial wealth through consistent ESPP participation over the years. While past performance doesn't guarantee future results, the instant 15% discount plus the lookback provision provides a significant advantage.

Frequently Asked Questions

What happens if BetterHealth stock goes down during the purchase period?
The lookback provision protects you. Your purchase price is based on whichever price is lower—start or end of period. So if the stock drops, you pay based on the lower end-of-period price (minus 15%).

What if I leave BetterHealth during a purchase period?
Your contributions stop when you leave, and any funds you've accumulated will be refunded to you with your final paycheck. You'll keep any shares you've already purchased in previous periods.

Can I participate if I'm part-time?
Yes! Part-time employees are eligible after 90 days, just like full-time employees.

Are there any fees?
There's typically a small transaction fee when you sell shares through the brokerage, but there's no fee to participate in the ESPP or to hold shares.

Can I gift or transfer my ESPP shares?
Yes, once the shares are in your brokerage account, you own them and can gift or transfer them like any other stock you own.

Ready to Become a Shareholder?

The next enrollment window is your opportunity to start building ownership in BetterHealth. With the 15% discount and lookback provision, the ESPP offers immediate value and long-term wealth-building potential.

Contact Benefits for Help:
Email: [e-mail]
Phone: [phone] ext. 2300
UKG: Submit a case under "Benefits & Insurance"

Remember: The best time to start building equity is during the next enrollment window. Mark May 1-15 and November 1-15 on your calendar so you don't miss your opportunity!