From being solely a subject for philosophers and poets, the pursuit of happiness has become a pragmatic, widely acknowledged arena of interest for companies and their employees. Stock compensation, if fully appreciated and understood, can improve happiness. Excerpted from an article by Bruce Brumberg, the editor-in-chief of myStockOptions.com, the 10 points summarized below show how. You can also read his full article at our website.
1. Wealth creation. When your company's stock price increases—whether you have grants of stock options or restricted stock/RSUs, participate in an ESPP, or own company stock—your wealth increases, perhaps substantially. Remember that what really matters for your financial wellness (and overall happiness) is what you do with that wealth and how you fit it into your funding of personal financial goals.
2. A sense of anticipation. Wealth accumulated from your company's stock plan can bring satisfaction and financial security. Moreover, research has found that anticipating the benefits of these gains can be equally (if not more) enjoyable.
3. A feeling of being special. If you equity awards, you're typically receiving a benefit many employees do not get. Mindfully feeling grateful, appreciative, and enthusiastic about something that's special is another way to further your own happiness.
4. ESPP participation and discount. Most employee stock purchase plans (ESPPs) are a good deal. They offer a discounted purchase price, and some use a lookback to calculate it. Everyone loves a discount; getting one from your company should help to make you happy.
5. Control over when you receive income and pay taxes. You have the opportunity to avoid immediately triggering ordinary income and taxes when you receive a grant of stock options or stock appreciation rights or when you enroll in an ESPP. From our experiences with stock plan participants on myStockOptions.com and the popularity of our Tax Center, it seems that no matter how wealthy people are, they always want to reduce or defer taxes.
6. Donations and gifts of company stock. Studies have shown that charitable people tend to be relatively happy overall. Donations of appreciated company stock you have held long-term can support organizations and causes that you believe in.
7. Being an owner in your company. When you receive a stock grant or acquire company stock, you gain an ownership interest in your company. Ownership often brings more control over your work life and perhaps even some input into your company's decisions, making you happier at what you do for a living.
8. New friends. Bonding with other people is a source of happiness. Stock compensation can be a tie that strengthens your relationships with colleagues: talking with co-workers about ways to handle grants and taxes, or how you'll use gains from equity awards or ESPP participation.
9. Feelings of financial security. Even if your 401(k) plan is well funded and you are expecting meaningful Social Security benefits, you will probably face a gap between the cash these sources can generate and your spending needs and wishes in retirement. Income from stock compensation and company stock holdings can help you plug that gap.
10. Mindfulness and meaningfulness. When your honest, ethical, hard work elevates your company's stock price, equity compensation rewards you. That can heighten your feelings of engagement, optimism, and happiness by providing additional meaningfulness to your job. In doing so, it gives you the right mindset for professional and personal success.