For more recent survey data on this topic, see another commentary in this blog.
As corporate competition for valuable employees intensifies in the current resurgent job market, the presence of a company stock plan is proving to be a crucial advantage. A survey by Fidelity suggests that many employees don't just value stock plans highly but now expect them as an employment benefit, especially when considering a new job. Fidelity found that among the surveyed employees in 2014, about four out of five (82%) say an attractive stock plan is something they want a new employer to have. Moreover, 40% stated outright that they would not consider a new job opportunity unless the company offered a stock plan—a view held by a whopping 86% of the survey respondents under the age of 40. A significant minority of the surveyed employees (10%) stated that their company stock plan is worth more to them than any other employment benefit, including medical insurance and 401(k) plans.
In the battle for valuable workers, the edge given by stock plans does not stop with merely attracting employees. More than half (57%) of the respondents to Fidelity's survey asserted that the company stock plan has elevated their loyalty to the company, and a similar number (54%) said that it makes them work harder. The survey results also indicate the retention value of stock plans, which can give employees a very strong reason to stay at their companies. "Giving up my current stock plan benefits would make it difficult for me to change jobs/companies" is a statement agreed with by 37% of US respondents and 35% of non-US respondents in Fidelity's survey.
This predilection for stock comp among employees seems to be correlated with their use of stock plan educational materials and other communications, which we at myStockOptions.com are happy to see. In Fidelity's survey, nearly half of the responding participants (46%) said they regularly use available stock plan information to make choices about their grants, up from just 38% in 2011. About as many (49%) prefer learning about the plan through online materials, also up from just 38% three years ago. The surveyed plan participants tend to be astutely engaged with their plan and their grants:
- 87% say they know how much their grants are worth.
- 87% know their vesting schedules.
- 88% understand the plan well enough to explain it to a new colleague.
Stock plans seem to be increasingly a valuable adjunct to retirement-savings vehicles such as 401(k) plans. Saving for retirement is the overwhelming top use of stock plan assets among the US employees surveyed by Fidelity.
| Intended use of stock plan assets |
Percentage of surveyed US stock plan participants |
| Reinvestment in retirement-savings account | 41% |
| Payment of bills or debt | 14% |
| Investment in stocks or mutual funds | 13% |
| Emergency fund | 9% |
| College funding | 6% |
| Home purchase | 6% |
| Home improvements | 5% |
| Special events | 3% |
| Other uses | 5% |
Among non-US stock plan participants, only 28% said they intend to reinvest proceeds in retirement savings. However, the percentages of non-US respondents indicating use of proceeds for a home purchase (11%), home improvements (10%), or a special event (6%) were about twice as high as those of US respondents.
As we have said many times before, the more participants know about their stock compensation, the more likely they are to appreciate it—and stay with the company. The independent, unbiased educational resources of myStockOptions.com are available for licensing by companies to help plan participants learn more about their equity comp. Our resources include a growing number of videos and podcasts to complement our articles, FAQs, interactive quizzes, tax guides, glossary, and tools.
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