Understanding Our Team Member Stock Purchase Plan

When you get hired by a company, a salary and benefits are part of a normal compensation package. But one thing that’s really important is having some sense of how your work is making an impact on the growth and success of the company. One very tangible way is to have some ownership in what you do.

As a public company, one of the things that we offer at Rocket Companies^® is the ability to invest in the company and reap the rewards of company success through our Team Member Stock Purchase Plan (TMSPP).

Our Team Member Stock Purchase Plan allows for the exclusive opportunity to purchase RKT stock reserved for team member purchase. You may see this referred to elsewhere as an Employee Stock Purchase Plan (ESPP).

Every stock purchase plan is different, so be sure to speak with your Human Resources team and a financial planner before committing to anything. We’ll be talking for the rest of this post specifically about our offering.

Once per quarter, an enrollment window opens and you are given the option to participate in the TMSPP for the coming quarter. You can choose to contribute up to 15% of eligible earnings toward stock purchases.

The money is taken out of your paycheck and set aside throughout the quarter. At the end of each window will be a purchase date. Shares are purchased at a 15% discount based on the share price at the end of this trading day. It’s worth noting that the amount of the discount is treated as income and taxed that way.

You can also choose to stop contributing at any time. If you choose to withdraw before the end of the offering period, contributions are refunded on an upcoming paycheck.

Any investment has advantages and drawbacks. We’ll mention a few here, but it’s also important to speak to your financial advisor and/or tax professional.

Pros

• Share in successes: When RKT does well, you get to share in that success. Held over the long-term, it could pay off for you well into the future if the company meets its objectives.
• Discounted share price: Because you’re a team member, your shares are cheaper through the TMSPP than they would be for the general public. In this way, you can purchase more stock, creating higher potential profits.
• Hassle-free investing: Because it’s coming out of your paycheck, you don’t have to go out of your way to schedule a transaction and buy the company stock if you choose. This is taken care of on your behalf if you participate in the plan.

Cons

• Risk of loss: Stock prices go up and down for all sorts of reasons both within and apart from a company’s control. Any investment carries a risk of loss. This is no different.
• Not diversified: This should be just a piece of your financial portfolio. If you draw your paycheck from us and RKT is your only investment, that’s opening yourself up to more risk by putting too many eggs in one basket.
• Lower take-home pay: if you are buying shares in the plan, the final amount of your check will be lower based on the percentage of your contribution.

You choose an amount to set aside via payroll deduction. When shares are purchased, they’ll be put into a brokerage account you’ll have access to through the company. Any amount left over that wouldn’t buy a whole share is refunded to you on your paycheck.

Generally, once the shares become yours, you’ll be able to sell them at any time. There may be restrictions depending on whether you have access to inside information based on your position within the organization.

How much can you contribute via payroll deduction?

You may contribute up to 15% of your eligible earnings in an account for purchase on the offering date.

Is there a discount on the stock price?

There’s a 15% discount based on the share price of the stock at the end of the planned purchase day for that quarter.

What are the tax implications?

There are two taxable events to think about: the purchase and the sale of the shares.

When you purchase the shares, you’re getting them at a discounted rate compared to the public. The amount of the discount is considered taxable earnings. It will show up that way on your pay stub.

If you make a profit by selling the stock for more than the fair market value than it had when you bought it, that amount is subject to capital gains tax. The tax rate depends on how long you’ve held the stock. If you have any questions, we recommend consulting a tax advisor.

Our Team Member Stock Purchase Plan gives our team members the chance to buy into the company at a discounted rate so they can have some ownership in its success and potentially reap the rewards.

Every investment comes with its own risks, and we certainly recommend speaking with a financial advisor. But if you’re interested in working at a company that gives you a chance to see the fruits of your labor, check out our open positions!