Research Shows Continued Growth In The Use Of Restricted Stock, RSU, And Performance Share Grants
26 June 2014
After many years of catching up on stock options, restricted stock and restricted stock units (RSUs) are now the most commonly used types of equity award. In its 2013 Domestic Stock Plan Design Survey, the National Association of Stock Plan Professionals (NASPP) found that "time-based restricted stock grants/awards and performance awards have both surpassed stock options in prevalence," in the words of the survey's executive summary. "Restricted stock/units are now the most commonly used award among companies regardless of industry and at all employee levels (81% of companies). Restricted stock units are the most common form of full value share awards (77%)."
For its 2014 Equity Trends Report, the compensation research firm Equilar looked at trends in the stock-based compensation footnotes of proxy statements to examine stock grant practices at 1,345 companies in the S&P 1500 from 2009 through 2013. Like the NASPP, Equilar observed a striking acceleration in the ongoing shift from stock options toward restricted stock, RSUs, and performance shares:
- In 2013, 34.7% of the surveyed companies granted only restricted stock/RSUs, up from just 20% in 2009.
- The percentage of companies granting only stock options fell from 10.7% in 2009 to 4.3% in 2013.
Year | Restricted stock only | Options only | Both |
2009 | 19.9% | 10.7% | 66.5% |
2010 | 22.3% | 8.1% | 67.5% |
2011 | 25.9% | 6.8% | 65.5% |
2012 | 30.7% | 5.1% | 62.3% |
2013 | 34.6% | 4.3% | 59.6% |
Other findings by Equilar include the following:
- The use of performance share grants continues to grow: 68.9% of the surveyed companies granted performance awards in 2013.
- In 2013, 79.7% of all performance share grants were long-term performance awards. In both long-term and short-term plans, the most common performance-related vehicle was performance share units (61.8% of all performance-related grants).
- In 2013, 23.7% of all performance-based grants included time-based vesting restrictions after the performance periods. The most common post-performance period was two years of additional vesting.
For additional data on changing stock grant practices, see the related FAQ at myStockOptions.com. See also our article series on trends in corporate stock grant practices as reflected by the data in the NASPP's 2013 Domestic Stock Plan Design Survey.
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