What is the state of employee stock purchase plans today? For people (like us) who love survey data, the National Association of Stock Plan Professionals recently shed some light on ESPP usage. In its 2011 Domestic Stock Plan Administration Survey, the NASPP found that the percentage of responding companies which have ESPPs (52%) was slightly lower than it was in its prior survey, in 2007 (60%). Of the companies without an ESPP, 9% reported that they had eliminated their ESPP since the 2007 survey. However, among the companies with ESPPs, 8% reported that their ESPP was new within the prior three years. ESPPs are most common in the high-tech sector (72% of high-tech companies) and lowest in the manufacturing sector (29%).
The NASPP survey reported that 82% of the surveyed companies had tax-qualified ESPPs in 2011, an increase of five percentage points over the figure in 2007. While only 24% had nonqualified plans, this figure has risen from just 9% in 2004.
For Section 423 ESPPs, the most common length of offering period in the 2011 survey is, by far, six months (53%). The next most common length is three months, a distant second at 19%. Interestingly, the once more common 12-month offering period now occurs at only 11% of the surveyed companies, and a 24-month period is even scarcer (9%). These trends indicate some small effort to reduce the FAS 123(R) expense. For nonqualified ESPPs, the most common lengths of offering period are three months (31%) and six months (27%).
For more survey data showing ESPP trends, see the FAQ on the topic at myStockOptions.com. If you're not familiar with ESPPs, take a few minutes to hear our fun introductory podcast (The Basics of ESPPs). And if you think you know your ESPP stuff, try your hand at our interactive ESPP quiz