SkyWest Employee Stock Purchase Program and 401K

[skywav8r]

When I was at Skywest I bought a truck with my ESPP and made enough for a good down payment on a house. 15% to 5% sucks but its better than a stick in your eye. I watched the trends in the stock price for years. For the three weeks following the 6 month stock purchase the stock drops about 5-10%. Between 3-5 weeks post purchase the stock is even money or higher. i.e. don't sell the minute you get it. Too bad you ASA guys weren't around to enjoy the stock splits and the jumps from the teens up to $40. $$$$ Bottom line, if you have the money, the ESPP is still a good thing.

 

[Chairman]

Sure won't beat Jan 06 when the return was 79% and the company ran out of stock to issue. Was a great perk huge loss in the so called "Total compensation package"

 

[Andy Neill]

Andy, do you realize this is on Selling price ONLY not the better of the two prices?

I do indeed. It may be helpful if you could show me where my math is in error.

 

[Roger Dat]

I do indeed. It may be helpful if you could show me where my math is in error.

This money is coming out of our checks after taxes, not before.

At least it is over here in Atlanta.

 

[Andy Neill]

This money is coming out of our checks after taxes, not before.

At least it is over here in Atlanta.

Very true but that doesn't affect the return rate I stated. By the way, there is a way to juice the total you get from SKYW Inc by setting your 401k levels to the right spot.

 

[Roger Dat]

so help me out here. If i get a 5% discount on a stock and buy it, how does that make it 21%.
Why not just 5%

I'm not sure I get it

 

[Andy Neill]

so help me out here. If i get a 5% discount on a stock and buy it, how does that make it 21%.
Why not just 5%

I'm not sure I get it

Step by step. Let's say you are putting in $100 per paycheck (every two weeks) for a total of $1300 over the course of 6 months. At the end of that time, you buy 100/95th times $1300 worth of stock ($1368.42) for $1300. That is a benefit of 5.26%, right?

Now that benefit was realized on an average of $650. In other words, you didn't put in $1300 at the beginning of the period. You deposited it $100 every two weeks. So a benefit of $68.42 on an average balance of $650 is 10.52%.

Finally, this was the return on a six month period. Annualized, that rate of return would be 21.14%. In other words, this is a better deal than depositing $100 per month for 6 months in a savings account that promises an APY of 20%.

Does that clear things up. If not, give me your figures.

Let me ask this. If you don't do this to the max, what are you going to do with the money that will deliver that much return?

 

[Roger Dat]

Alright now, got someone smarter than me to explain what you were saying. Now it is clear. Thanks

What were wqe making when we got a 15% discount. I was putting in the whole 15% of my check....

 

[SpyFlysDOTs]

Did you subtract the 15% tax on your profit?

 

[Andy Neill]

Did you subtract the 15% tax on your profit?

OK. If you want to play that game, 15% of 21% is 3.65% so the return is only 17.35%. What are you doing to get that kind of return? The tax on saving interest is more and the return is much less.

If you don't want to go with this, point me in a better direction. I can't handle all this negativity. I'm in a success mode - not a victim mode.