We all know that stock compensation can be an effective way for companies to attract, retain, and motivate employees. However, for a company's stock plan to achieve its full potential, its managers must understand how employees view their grants, the areas where they need equity award education, and how the benefits of the plan can be better communicated.
To this end, Morgan Stanley recently published Attitudes And Behaviors Of Stock Plan Participants (September 2013), the results of its survey about perspectives on stock plans in a sample of 750 employees and executives. Although stock compensation is often regarded as an executive perk, the reality found by Morgan Stanley is that only a fifth of the surveyed plan participants are executives or senior managers. In fact, a significant majority of the participants (65%) either have skilled professional or technical roles or work in middle or low-level management. About half of the surveyed plan participants are younger than 50.
ESPP participation is by far the most common form of stock plan engagement among the survey respondents, 75% of whom participate in an ESPP. Beyond that, 43% have stock options, 27% have restricted stock, and 23% have performance shares. Just under half (46%) participate in two or more company stock plans. Interestingly, while 59% of all the respondents regard their equity awards as a major part of their compensation, even more (82%) said they think that operating a stock plan is a smart business move for their company.
Most of the survey respondents (92%) expressed satisfaction with their companies' stock plans, and 65% praised their stock plans as "extremely or very valuable" employee benefits. One interesting line of inquiry gauged the perceived value of stock plans to that of other benefits, especially 401(k) plans. In this comparison, every grant type proved to be more popular than other company benefits, with the sole exception of ESPPs, which were only just barely edged out.
Stock Plan Value Compared With Value Of Other Benefits, Such As 401(k) Plans
| Stock plan type | More valuable | Less valuable |
| Restricted stock | 43% | 23% |
| Performance shares | 39% | 26% |
| Stock options | 37% | 23% |
| ESPPs | 29% | 31% |
Stock Plan Education Is Crucial
Nearly all of the respondents (89%) said they think it is important for their company to provide education and guidance on the workings of their stock plans (helping companies with this is one of the reasons why we started myStockOptions.com). However, only half of them actually believe that their employers have done a very good job in this regard. Respondents included the following among their preferred ways to get information about stock plans.
| Website | 57% |
| Email communications | 56% |
| Meetings at work | 47% |
| Webinars | 42% |
| Postal mail communications | 33% |
| Videos from experts | 22% |
Lastly, the survey found that stock grant recipients who have developed a written financial plan that includes their equity awards are much more confident about their long-term financial goals than those who have not. In general, the results of the survey suggest that stock plans whose communication includes education on the role of equity awards in financial planning are more likely to be highly valued by employees.
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