Game-Changing Court Decision Shows Why You Must Watch For Noncompetes And Other Restrictive Covenants In Stock Grant Agreements
Restricted Stock & RSUs: New Videos At myStockOptions.com Offer An Engaging Way To Present Basic Concepts And Taxation

Research Shows Continued Growth In The Use Of Restricted Stock, RSU, And Performance Share Grants

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.

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Working...
Your comment could not be posted. Error type:
Your comment has been saved. Comments are moderated and will not appear until approved by the author. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.

Working...

Post a comment

Comments are moderated, and will not appear until the author has approved them.

Your Information

(Name and email address are required. Email address will not be displayed with the comment.)