If corporate stock plan education were a student, it would be getting a B-plus—not bad, but can do better. This is our takeaway from the data in Securities' 2016 E*TRADE Corporate Services Annual Participant Survey, which obtained responses from more than 43,000 people with equity compensation who use the firm as a broker. (Please note that the survey results below are solely owned by E*TRADE Financial Corporation and may not be reproduced or distributed in whole or in part without the written consent of E*TRADE, which is not affiliated with myStockOptions.com. E*TRADE Corporate Services provides equity compensation management solutions, including participant services from E*TRADE Securities.)
Mixed Report Card
In brief, the findings of E*TRADE's survey indicate the following:
- Most stock plan participants like their equity compensation and say it enhances their commitment to their companies.
- About 40% of the respondents say that stock comp would be a factor in deciding whether to stay in their current job or take a job with a different company.
- The survey responses make it clear that participants need well-rounded general financial education, not just communications about the specifics of their grants. Respondents indicated a desire to learn more about basic financial planning, investing, and the role of their equity comp in their overall financial planning.
- Many employees are eager to know more about how to make the most of their stock comp, when to take action (e.g. exercise options or sell shares), and the related tax impact. The survey suggests that ESPP participants need the most hand-holding in those areas.
- The most popular uses of stock compensation are (1) acquiring company shares for long-term holding and (2) paying big expenses.
- It appears that few participants sell shares and then re-invest proceeds in other securities.
- A growing number of the employees apparently perceive stock compensation as simply "extra pay, like a bonus."
Survey Data Shows Areas For Improving Stock Plan Education
The majority of stock plan participants surveyed by E*TRADE (75%) participate in an employee stock purchase plan. More than half (57%) have restricted stock or RSUs. Despite general decreases in the use of stock options, 42% of E*TRADE's survey respondents continue to have option grants.
According to the survey, a whopping 80% of plan participants do not fully understand at least one concept or feature of their stock compensation. The survey data that we present in the table below indicates that maximizing financial benefits and understanding tax impacts are the areas where plan participants need the most educational guidance.
| Plan concept or feature | Stock plan participants who understand this "quite well" or "extremely well" |
| How to access account | 74% |
| How vesting schedules work | 62% |
| How the stock plan works | 58% |
| How to find information about the stock plan | 49% |
| How to decide when to take action | 43% |
| How to make the most of stock compensation | 34% |
| Tax implications | 33% |
The survey found that email and video are the most popular media for receiving stock plan education and communications, followed closely by written materials that can be downloaded from the company's intranet.
Stock Plan Education Is A Core Company Activity
While stock plan professionals have made huge strides during recent years, stock plan education can always be better—both to help plan participants and to maximize the value of plans for companies, which are depending on them to attract, keep, and motivate valuable employees. The more participants know about their stock compensation, the more likely they are to appreciate it, avoid mistakes, benefit from it, and be loyal to the company. This puts stock plans in a crucial position for corporate vitality and value creation.
The independent, unbiased educational resources of myStockOptions.com can help with stock plan education, including tax impacts and financial planning. Our content is available for licensing by companies to help plan participants learn more about their equity comp. These 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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