https://www.shrm.org/resourcesandtools/hr-topics/compensation/pages/espps_isos.aspx
Annual $25,000 Limit
An ESPP must provide that all of an employee’s ESPP options (under all ESPP plans sponsored by the employer and its related companies) may not vest and become exercisable with respect to more than $25,000 worth of employer stock (measured of the option date of grant) per year. In the proposed regulations, the limit did not begin to apply with respect to a particular option until the year in which the option was outstanding and exercisable.
The final regulations adopt a more generous approach that permits the limit to begin to apply in the year in which the option is granted even if it does not vest and become exercisable until a later year. To the extent the limit is not “used” during the year of grant (because the option does not vest until a later year), it may be added to the limit for the subsequent year.
Example —On Sept. 1, 2010, an employer grants employees an option under an ESPP that will be exercised automatically on Aug. 31, 2011, and Aug. 31, 2012. As a result, on Aug. 31, 2011, the employee may purchase under the option employer stock equal to up to $50,000 (determined at the time of grant of the option), and on Aug. 31, 2012, the employee may purchase under the option an amount of employer stock equal to up to the difference between $75,000 and the fair market value of employer stock purchased during year 2011. |