The Novartis Employee Share Purchase Plan: Everything You Need to Know
If you work at Novartis in the U.S., Canada, or Puerto Rico, the Employee Share Purchase Plan (ESPP) lets you buy Novartis shares, in the form of American Depositary Receipts (ADRs), at a 15% discount through payroll deductions. It can be a valuable benefit, but the rules around timing, limits, and taxes are easy to get wrong.
This guide covers who's eligible, how the plan works, how much you can put in, what happens to your shares, and the mistakes to avoid.
The plan rules below are based on the Novartis Employee Share Purchase Plan Program Guide for North American Associates, updated November 1, 2025.
Who's eligible
All Novartis associates in the U.S., Canada, and Puerto Rico can participate, except:
Associates who don't receive a base salary or are on unpaid leave (you become eligible once you return to Novartis and/or resume receiving a salary through payroll)
Non-employee directors of Novartis companies and U.S. Section 16(b) officers
Associates on short-term temporary employment contracts
Contractors, consultants, contingent workers, and other third-party service providers
New hires become eligible starting with the next administratively available Election Period after their start date.
How the plan works
The plan runs on a quarterly cycle with three key stages:
Election Period (enroll or make changes): The 1st through 15th of the month before each calendar quarter: December 1 to 15, March 1 to 15, June 1 to 15, and September 1 to 15. This is the only time you can enroll, change your contribution, or unenroll.
Offer Period (contributions are collected): The next calendar quarter. Your chosen percentage is deducted from each paycheck automatically, on an after-tax basis. You can't make lump-sum contributions.
Purchase Date (shares are bought): The last trading day of the calendar quarter. Fidelity Stock Plan Services uses your contributions to buy Novartis American Depositary Receipts (ADRs), which trade on the NYSE under the ticker NVS.
Your election carries forward. Once you enroll, your percentage repeats every quarter until you change it or unenroll in a future Election Period.
You're locked in during the Offer Period. You can't change, cancel, or withdraw your contributions once the quarter starts.
How to enroll: You'll get an email from Fidelity Stock Plan Services when the Election Period opens, with instructions on how to enroll. You need a Fidelity Stock Plan Account, which you can set up through Fidelity NetBenefits if you don't already have one.
How much you can contribute
You choose a percentage of your base salary. Each year, you can contribute up to 15% of your annual base salary, but no more than $21,250 (or the equivalent in Canadian dollars).
You can spread that across all four quarters or concentrate it. To reach the annual maximum sooner, you can contribute up to 60% of your base salary in a single quarter, subject to your other payroll deductions and the annual maximum.
When you hit the cap: Your contributions stop automatically. If your election carries forward quarter to quarter, contributions pause for the rest of the year and resume in the first-quarter Offer Period of the next year.
Watch your paycheck: If your net pay isn't enough to cover your elected contribution, payroll deducts as much as is available. That means your net base salary on those paychecks can be zero. Since you can't change your election during the quarter, choose a percentage that fits your budget.
How the 15% discount works
Your purchase price is 15% below the Novartis ADR's closing price on the Purchase Date, the last trading day of the quarter. The program guide doesn't describe any comparison to the price at the start of the quarter.
Here's the example from the Novartis program guide:
Base salary per paycheck: $2,461.54, paid bi-weekly (6 paychecks in the quarter)
Contribution: 1%, or $24.62 per paycheck
Total contributed for the quarter: $147.69
NVS ADR price on the NYSE on the Purchase Date: $82.00
Discounted price: $69.70
ADRs purchased: 2.119
Buying at 85% of the market price means that if the price stayed exactly the same, you'd be up about 17.6% on what you paid. But the price can move before you're able to sell. Fidelity deposits your ADRs as soon as administratively possible, and the program guide estimates processing can take up to 15 days in some quarters. There's no guarantee you'll come out ahead.
Holding and selling your shares
Once your ADRs are deposited into your Fidelity Stock Plan Account, you own them. You can view them on the Stock Plan Summary page in Fidelity NetBenefits.
Selling: You can sell as soon as your ADRs are in your account.
Holding: If you keep them, they must stay in your Fidelity Stock Plan Account for two years from the Purchase Date. After the second anniversary, you can move them to any other personal brokerage account.
Fees: There are no fees to hold or sell Novartis ADRs in your Fidelity Stock Plan Account, even after you leave Novartis. If you transfer them to another firm after two years, check that firm's fees.
Dividends: You don't receive dividends during the Offer Period, since no ADRs have been bought yet. Once purchased, your ADRs receive dividends in your Fidelity account, if dividends are approved by the Novartis AG Board.
Taxes
Your contributions come out of your pay after taxes, so they don't lower your taxable income. How your shares are taxed after that depends on how the plan is set up, which the program guide doesn't spell out. A Tax Notice is posted on Fidelity NetBenefits, and Novartis's tax services provider issues annual tax guides or fact sheets. Read yours before you sell.
In general, for U.S. taxpayers:
If the plan is not tax-qualified, the discount is generally taxed as ordinary income when your shares are purchased. Any change in value after that is a capital gain or loss when you sell.
If the plan is tax-qualified under Section 423, the discount generally isn't taxed until you sell. How much is taxed as ordinary income versus capital gain depends on how long you held the shares.
Watch your cost basis. Brokerage tax forms often report your cost basis as the discounted price you paid. If part of the discount was already taxed as income on your W-2, you may need to adjust your basis on your tax return so you don't pay tax on it twice.
Canadian associates are subject to different tax rules and should check the Tax Notice for Canada.
If you leave Novartis or pass away
Leaving mid-quarter: If you leave Novartis during an Offer Period, before your ADRs are purchased, no ADRs are bought for you. Novartis returns the money deducted from your paychecks as soon as administratively possible. The same applies if you have an international transfer.
ADRs you already own: There's no forfeiture. ADRs already purchased for you stay in an account you own, and you decide what to do with them.
If you pass away during an Offer Period: Contributions collected that quarter are refunded to your estate. ADRs from earlier purchases stay in your Fidelity Stock Plan Account and are handled according to that account's beneficiary elections.
Name a beneficiary. Make sure you've set up beneficiary elections on your Fidelity Stock Plan Account. Fidelity can help at 800-354-3971 (U.S. and Puerto Rico) or 800-544-0275 (Canada).
Common mistakes to avoid
Contributing more than your budget allows. A high percentage, especially the 60% single-quarter option, can leave you with a zero net paycheck, and you can't change it until the next Election Period.
Missing the Election Period. You can only enroll or make changes from the 1st to the 15th of December, March, June, and September.
Forgetting your election carries forward. It repeats every quarter until you change it.
Treating the discount as guaranteed profit. The stock price can fall between the Purchase Date and when you can sell.
Holding too much Novartis stock. Your paycheck already depends on Novartis. Letting ESPP shares pile up concentrates your savings in the same company.
Paying tax twice on the discount. Check your cost basis when you sell and adjust it if needed.
Skipping the beneficiary form. Without beneficiary elections, your ADRs may not go where you intend.
Ignoring trading restrictions. Your participation is subject to the Novartis Insider Policy and Code of Ethics. Following any trading restrictions is your responsibility.
Where to get answers
Payroll and eligibility questions: Email espp.info@novartis.com.
Account, enrollment, and beneficiary questions: Call Fidelity at 800-354-3971 (U.S. and Puerto Rico) or 800-544-0275 (Canada), or log in to Fidelity NetBenefits.
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About the author
Michael Walstedt, CFA, CFP®, is the founder of Reliant Wealth Advisory, a fee-only fiduciary firm in Hoboken, New Jersey. He helps business owners, executives, and professionals in the New York/New Jersey area, as well as nationwide, with financial planning and investment management.
Reliant Wealth Advisory is not affiliated with Novartis AG or Fidelity Investments. This article is for educational purposes only and is not tax, legal, or investment advice. It summarizes the Novartis Employee Share Purchase Plan Program Guide for North American Associates (updated November 1, 2025) and general U.S. federal tax rules. Plan details vary and may change, and the official plan documents govern, so confirm your specific benefits through Fidelity NetBenefits, the Tax Notice for your country, and espp.info@novartis.com. Consult a qualified tax professional and attorney before acting.
