Running the Purchase Stock Process

This topic provides an overview of the Purchase Stock process and discusses how to purchase stock.

Page Name	Definition Name	Usage
Process Stock Purchase Page	ST_RUNCTL_PURCH	Run the Purchase Stock process. Specify the purchase ID definition to use and the processes to run.

The Purchase Stock process (ESPP_PURCHASE) is the final calculation in the stock purchase process. It calculates the number of shares that can be purchased by the participants identified in the Update Participants process for the contributions collected by the Gather Contributions process at the price identified by the Calculate Prices process for the grant date in the offering period. The purchase ID (defined in the Stock Purchases component) defines the purchase details.

The stock purchase plan defines the rules for the purchase of stock in the Stock Purchase process. The purchase period limits, offering period limits, purchase grant value limits, and residual contribution rules determine how many shares participants can purchase and the contributions that can be used towards the stock purchase.

The purchase process derives the number of shares that a participant can purchase based on the contributions gathered and the share, contribution, and value limits. If a participant will exceed a limit, the system adjusts the contribution to allow a purchase within the defined limit. Contributions over the limit are set to residual contributions and are processed according to plan definition.

The purchase remains pending until you confirm the purchase. You can rerun the purchase process repeatedly. Each time, the process recalculates and captures changes made by other processes, such as calculate prices or gather contributions.

Process Groups

The purchase process runs by process group in the order defined on the Stock Purchase - Process Groups page. You can process all groups, an individual group, or an individual participant. The processing order is important when a participant spans multiple process groups, for example, when a participant (employee) transfers from one organization to another, and has multiple sets of contributions. Although the system supports this structure, the best practice is to report the participant's contributions with the primary process group.

The processing order impacts a participant's limits. The first purchase that you process absorbs the majority of the limits. Because the purchase process enables you to run preliminary calculations for all groups and individual groups, there's a potential that the system might not calculate the limits properly unless you rerun all process groups that contain the same participant. In a subsequent processing, the system bases the calculations for a participant on the previous process group. If you recalculate the initial process group without recalculating other process groups that contain the same participant, the calculations might be incorrect if the participant reaches a defined limit.

The system generates a message for all participants who have contributions in multiple process groups. You can select those participants and process them separately by selecting the run method of Process by Participant.

Purchase Calculations

The Gather Contributions process identifies each participant's contributions that are available to the purchase process. The system performs several calculations for each participant to determine the number of shares that a participant may purchase.

By process group and stock plan for the purchase period:

Calculation	Method
Total contributions	Sum of all the participant contributions from ST_CONTRIB_PART for the process group and stock offering / purchase period and plan.
Shares purchased	Total contributions / (purchase price × proration %). For an antidilution purchase, this is total contributions / antidilution price.
Purchase value	Purchase price × shares purchased.
Residual contributions	Total contributions − purchase value.

Across all process groups and stock plans for the purchase period within the current purchase period:

Calculation	Method
Shares purchased	Sum of all shares purchased for the stock offering and plan which are outside of the current process group but within the stock offering / purchase period and plan.
Grant value	Shares purchased × grant FMV.

Across all process groups and stock plan for the purchase period outside the current purchase period but within the same offering period:

Calculation	Method
Shares purchased	Sum of all shares purchased for the stock offering and plan that are within the current stock offering and plan but outside the purchase period + shares purchased (purchase period) (see previous).
Grant value	Sum of (shares purchased for the stock offering and plan that are within the current stock offering and plan but outside the purchase period × individual grant FMVs) + sum (shares purchased (purchase period) × grant FMV).

Across all process groups for the same stock regardless of stock plan:

Calculation	Method
Grant value − calendar year	Sum (shares purchased for the stock × grant FMV) when the purchase period end date is between 01/01 of the year of the purchase period end date and 12/31 of the year of the purchase period end date.
Grant value − years outstanding	Sum (shares purchased for the stock × grant FMV) when the purchase period end date is between 01/01 of the year of the offering period begin date and 12/31 of the year of the offering period end date.

Order of Limits

Because you define multiple limits for a stock purchase plan, the order in which the system processes the limits is important. The order is:

Purchase period contribution limit.
Offering period contribution limit.
Purchase period participant share limit.
Purchase period grant value limit.
Offering period participant share limit.
Offering period grant value limit.
Purchase value limit (IRS section 423).

As a participant reaches these limits the system recalculates the following based on the limit:

Contributions available to purchase stock.
Shares purchased.
Grant value.
Purchase value.
Residual contributions.

Processing Results

The system holds all contributions gathered for participants that you've selected with a Hold Purchase flag. These contributions are carried forward or refunded, depending on the stock purchase plan setup rules.

After you calculate the final shares for a process group, you can view each participant's final shares using the Review Contributions page.

The participant issuance instructions determine whether the purchase process issues a certificate or makes a deposit to a brokerage firm. If no issuance instructions exist for a participant, the default option is to issue a certificate. If a certificate is issued, the mailing address established for the employee is used. If no mailing address is established, the home address is used.

Residual Contributions

Contributions left over from the purchase, called residual contributions, are refunded to the participant or carried forward to a future purchase. Contributions are typically leftover due to rounding, fractional shares, participant limits, or a Hold Purchase flag.

The stock purchase plan rules define the handling of residual contributions in the purchase process. The leftover residual contributions are converted back to the currency code of the process group. The exchange rate used is the reverse of the exchange rate used to convert from the source currency to the stock currency. The price is rounded according to the number of decimal places defined for the currency code. You can view a participant's residual contributions using the Review Residual Contributions page.

Steps for Running the Stock Purchase Process

To purchase stock:

Run the Purchase Stock process using the Purchase Stock page.
View purchase results using the Review Contributions page and the Review Residual Contributions page.

Use the Process Stock Purchase page (ST_RUNCTL_PURCH) to run the Purchase Stock process.

Specify the purchase ID definition to use and the processes to run.

Navigation:

Stock > Stock Purchases > Process Stock Purchase

Field or Control	Description
Gather Date	Enter the date on which the contributions were gathered.

Purchase Process Flags

Select the process or processes to run. Each process can be run separately or in a combined sequence.

Field or Control	Description
Update Participants	Run this process at any time.
Gather Contributions	If you have Payroll for North America, you must run the payroll process first.
Convert Currencies	Run this after you gather contributions.
Calculate Prices	Run this after you gather contributions and convert currencies.
Purchase Stock	Run all other processes before running the Purchase Stock process.
Run Method	Select a run method: Process All: Process all groups and individuals defined in the purchase ID. Process by Group: Select a process group to process in the Process Group field. Process by Participant: Select individual participants to process. The Participant(s) to be Processed group box becomes available so that you can select participants.