Benefits and Offerings

Employers are using equity to motivate workers, new study finds

Stock plan benefits remain intact and are growing for many, according to a recent study by Charles Schwab.

A majority of companies remain committed to stock plans.

One in four respondents (25%) says their company plans to increase stock plan benefits in the next year while 68 percent plan to maintain benefits at the current level.
Motivating employees to support the success of their company (65%) and giving employees a sense of ownership in the company (58%) were most commonly cited as reasons for offering these benefits.

A significant number of companies are issuing options, stock and performance shares to managers and other employees.

Half (50%) of participating companies now offer performance shares to manager-level employees.
Nearly half (48%) offer manager-level employees stock options, and one-third (34%) award restricted stock to managers.
More than a quarter offer performance shares (26%) and/or stock options (27%) to employees below the manager level, and 17 percent award restricted stock to this group of employees.

Percent of Companies Reporting Stock Plan Eligibility by Level of Employee

Q8. Please select which type(s) of employee is eligible to receive each of the follow (stock plan offerings)?

Stock options continue to be the most common benefit for employees.

Options to purchase company stock at a specified price are granted by 71% of responding companies, followed by:

Restricted stock (64% of responding companies). This stock is issued to employees and typically vests over a period of time.
Performance shares (51% of responding companies). This stock is issued to employees based on corporate performance.

Most companies offer stock plan benefits to motivate and provide a sense of ownership among employees.

Reasons for Offering Stock Plan Benefits

stock plan

Q6. Which two of the following describe why you offer stock plan benefits to employees?

The balance may be shifting to performance-based rewards.

Nearly eight in 10 (77%) respondents are granting more or the same number of performance shares. Approximately two-thirds of companies are issuing more or the same number of restricted stock (69%) and distributing more or the same number of stock options (64%).

ESPP participation has stayed the same or increased at a majority of companies.

To further increase employee ownership, employers are also aiming to boost participation in employee stock purchase plans (ESPP), which allow employees to purchase company stock at a discounted price. More than half of survey respondents (56%) say ESPP participation has increased or stayed the same since the market downturn. Sixty-five percent of company respondents currently offer an ESPP to their employees.

Plan Offerings Since Market Downturn ESPP Participation

Performance Shares | Restricted Stock | Stock Options