A Statistical Profile of Employee Ownership

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Updated February 2009

Estimated Number of Plans and Employees; Value of Plan Assets*

Type of Plan	Number of Plans (as of early 2009)	Number of Participants (as of the end of 2006)	Value of Plan Assets (as of the end of 2006)
ESOPs, stock bonus plans, & profit sharing plans primarily invested in employer stock	11,400	13.7 million	$925 billion
401(k) plans primarily invested in company stock	1,000	7 million	$275 billion
Broad-based stock option plans	3,000	9 million	(several hundred billion; not realistic to estimate)
Stock purchase plans	4,000	11 million	(not realistic to estimate)

Currency of Data

The NCEO estimates are based a variety of company surveys and, where available, government data. Another way to look at the data was provided by several questions included in the General Social Survey (GSS), a 2006 random sampling of working adults performed by the National Opinion Research Center (NORC) of the University of Chicago. Joseph Blasi and Douglas Kruse of Rutgers and Richard Freeman of Harvard, all affiliated with the Shared Capitalism Project of the National Bureau of Economic Research, organized the questions and their analysis. The National Center for Employee Ownership was one of the sponsors of the survey questions, along with the Shared Capitalism Project, the Beyster Institute, and the Employee Ownership Foundation. The Shared Capitalism Project receives support from the Rockefeller and the Russell Sage Foundations.

The GSS data are reported in detail in a separate page on this site. In sum, however, they showed that as of 2006, 20.0% of all employees working in the private sector report owning stock in their companies, while 10.0% held stock options. The two categories are exclusive of one another, but other data indicate that almost all employees holding options also own company stock in other ways. That would mean that approximately 25 million Americans own employer stock through ESOPs, options, stock purchase plans, 401(k) plans, and other plans, while 10.6 million hold stock options (and, usually, other stock). In 2006, 6.1% of employees received an option grant, but because many programs are not annual, the number holding options is much larger. Looked at on the basis of corporate organizational form, in 2006, 34.9% of employees working for for-profit stock corporations held stock in their employer in one form or another, while 14.6% of employees working for stock corporations held options. Because we cannot be certain that everyone understood the question asked about whether they hold options (even though the survey took pains to explain it), we have been cautious in making the estimate. Other survey data reported below confirm this 10 million estimate, so we feel fairly confident it is accurate.

Because of the differing estimating techniques and inevitable ambiguities of data collection and interpretation in this area, however, variations in results are to be expected. These numbers, as well as any other estimates, should always be understood with the caveat that they cannot be precise.

ESOPs and 401(k) Plans

ESOPs (employee stock ownership plans) are stock bonus plans qualified to borrow money; otherwise, the two types of plans are very similar. Estimating the number of ESOP companies, participants, and the assets they hold is limited by the availability and quality of data collected by the US Department of Labor through Form 5500.

The NCEO has revised its estimates for the number of ESOPs, using a consistent and conservative method across each plan filing year from 1999 on (earlier estimates use a different combination of methods). You may have seen somewhat different numbers in prior years, but we believe this new technique is both more conservative and more accurate. The current method begins with all available 5500 records. The NCEO cleaned the data in as many ways as possible by searching for missing data, removing companies that appear to have inactive ESOPs, and removing records with obvious errors. We erred on the side of making the most conservative estimate we were comfortable with, especially with regard to the number of plans.

The trends reflected in the "Growth of ESOPs and Equivalent Plans" table further down on this page illustrate a complex picture. The number of plans increases through 2000, at which point their number levels off at just over 10,000. The number of participants, however, increases each year until 2003 and has held fairly steady around 13 million. Plan assets have generally increased each year, up to the peak in the currently available data: $992 billion in 2006.

These numbers reflect our best efforts to remove sham S corporation ESOPs. In 1997, S corporations were allowed to create ESOPs, and starting in 1998 were given substantial tax benefits. Ambiguity in the law led to the heavy promotion of sham S corporation ESOPs in which only one or a few usually highly paid people actually got any ownership. In 2001, Congress passed a law to shut down these bogus plans, and the IRS issued strict new regulations. A high number of plans set up between 1999 and 2001 that were then unwound in the next few years. We identified and removed these companies where possible.

The Employee Benefit Research Institute and the Investment Company Institute for 2007 is the source for data on 401(k) plans. The data are analyzed based on participant account data, making it impossible to come up with more than a rough estimate of the number of plans that have company stock in them. Better estimates can be made for the number of employees who invest in company stock in their 401(k) plans and the value of these assets. Note, however, that very few of these plans are primarily invested in company stock any more (something more common several years ago).

Stock Options

"Broad-based stock option plans" are those that grant stock options to 50% or more of full-time employees. Unlike the case with ESOPs, it is not realistic to chart the growth of stock options year-by-year because there are no hard data compiled on a comparable basis year-by-year. We can look back at 1990 and estimate roughly a million option holders and look at the present day and estimate roughly 9 million option holders, but it is impossible to accurately say how many employees held options in 1994, 1995, 1996, 1997, etc. Why? ESOPs are highly regulated retirement plans, and companies with ESOPs must tell the government every year how many employees are in the plan. The government regularly publishes summaries of these data. Although it is imperfect, it gives us something to go on. For stock options, on the other hand, nothing of the sort is available.

Our current estimate for employees holding options is based on data from three sources. The first is an NCEO calculation done in the late 1990s that extrapolated from surveys of companies on the issue of what percentage of public companies had plans that included most or all employees as actual grant recipients (rather than just being eligible for grants). We assumed that although many private companies have broad-based plans, the total employment in these companies is relatively small; the number receiving options, we estimated would be one million or less. Using the public companies survey data, some of which was broken down by company size, we estimated how many employees would work for these companies and meet minimal criteria for actually receiving a grant. That number came to about 8 to 10 million in the late 1990s. More recent surveys have some downward movement in the percentage of companies offering broadly granted options through 2007.

The second source is the 2006 General Social Survey of the National Opinion Research Center. The survey's details are available on this Web site. The survey indicates that 10.6 million employees hold options This is the largest of all the surveys. A 2007 Harris Interactive poll asking a similar question showed the number to be about 10 million.

Finally, a 2008 Bureau of Labor Statistics survey indicates that about 8% of all private sector employees (about 9 million people) have stock options. This is down from 9 million in the 2006 survey, but the survey does not track the movement away from options to other individual equity plans, such as restricted stock and stock appreciation rights, which have replaced broad-based options in some companies. The survey indicates that 14% of managers and professionals receive options compared to just 2% of service workers and 5% of workers in mining, construction and maintenance. Twelve percent of employees making over $15 per hour received options, compared to 5% of those making less than $15. Workers in other categories fall in the 8% to 10% range. Thirteen percent of employees in companies with over 100 employees get options, compared to 4% in companies smaller than this. Most geographic areas fell close to the national average, but 11% of the workers in the Pacific region received options, compared to just 5% in the East South Central region.

Looking at the issue more on the basis of company practices, in "Give Everyone a Prize? Employee Stock Options in Private Venture-Backed Firms" (2005, unpublished), John R.M. Hand of the Kenan-Flagler Business School looked at data from 2004 and 2005 provided by VentureOne, a data provider on venture-backed firms. The VentureOne survey reported on the depth of options in 1,032 venture-backed companies responding to the survey for which adequate data were available. The study found the mean percentage of employees getting options was 89%, and 74% of the companies granted options to everyone.

A survey by the National Association of Stock Plan Professionals (NASPP) and Deloitte Consulting showed that companies have cut back somewhat on broad-based equity plans, but that these plans remain an important part of the employee ownership landscape. The survey presents the data in a way that makes it difficult to figure out just what percentage of companies offer awards to most or all employees, but some inferences can be drawn. (To be fair, this was not their primary purpose.)

A 2007 NASPP/Deloitte Consulting "Domestic Stock Plan Design and Administration Survey" found that among the 383 respondents (almost all public companies), the median percentage of employees participating in any kind of equity plan except an ESPP was 15%. Smaller companies were more likely than larger companies to have broad-based participation. The median was 75% or more in companies with up to 750 employees. At least 75% of the companies with fewer than 250 employees reported 100% employee participation in some kind of plan. As company size increases, the percentage drops so that full participation is rare at the largest employers. For companies with more than 10,000 employees, for instance, the 10% of companies with the highest participation levels average about 37% participation, while the typical company of that size has only 4% participation.

Looked at in another way, in companies with more than 30,000 employees, only 3% of the employees hold equity compensation awards. In companies with 251-750 employees, 75% do, while in smaller companies the percentage rises to 100%. The data are based on an equal-weighting for each company, regardless so size.

The data on ESPPs included 348 companies, 60% of which had ESPPs. Of those plans, 77% were qualified plans under Section 423 of the Code. Among companies with 423 plans, 16% reported participation rates of 71% or more, and 29% had participation rates of 50% or more. Non-qualified plans, which unlike Section 423 plans do not have to be broad-based, had much lower participation. A total of 79% of the companies with Section 423 plans said they offer a 15% discount, and another 6% offer a 10% discount. Two-thirds of the 423 plans have a look-back feature in which the purchase price is based on the lower of the stock's price at the beginning or end of the offering period. Offering periods tended to be short, 48% of the companies with Section 423 plans had six-month offering periods, and another 18% had thee-month offering periods.

Employee Stock Purchase Plans (ESPPs)

Employee stock purchase plans (ESPPs) include both tax-qualified "423 plans," which about 2,500 companies offer, and nonqualified plans, which about 1,500 companies offer. Data are based primarily on the National Association for Stock Plan Professionals' Stock Plan Design and Administration Survey (1998 and every two years thereafter), especially the more recent surveys. To estimate the number of employees covered under the plans, we took the total number of companies offering plans, multiplied those numbers by the average number of employees in the companies, and multiplied that number by the average percentage of participation in the plans. Almost all companies with ESPPs are public.

Multiple Plans

Many companies offer multiple plans, and many employees participate in more than one plan. For example, many ESPP participants are also in 401(k), stock option, or other equity compensation plans. Hence, the total number of participants in all these plans is definitely not the total of the numbers in the "Number of participants" column in the table at the top of this page.

Growth of ESOPs and Equivalent Plans

Year	Minimum Number of Companies with Plans	Participants	Assets	Plan Terminations	Proportion of Public Companies
1975	1,600	250,000	NA	NA	NA
1980	4,000	3,100,000	NA	NA	NA
1990	8,100	5,000,000	NA	NA	NA
1993	9,200	7,500,000	NA	NA	NA
1999	9,400	6,570,000	$350,000,000,000	4.8%	3.7%
2000	10,000	7,510,000	$369,200,000,000	6.8%	2.2%
2001	10,200	10,180,000	$497,100,000,000	2.9%	2.6%
2002	10,000	11,250,000	$554,100,000,000	3.3%	3.2%
2003	10,300	13,630,000	$727,800,000,000	2.9%	3.1%
2004	10,000	13,520,000	$797,400,000,000	3.2%	2.8%
2005	10,200	12,860,000	$791,600,000,000	2.8%	2.6%
2006	10,600	13,730,000	$922,500,000,000	3.1%	3.4%
2007	11,000	NA	NA	NA	NA
2008	11,400	NA	NA	NA	NA

Growth of Stock Options

Unlike the case with ESOPs, it is not realistic to chart the growth of stock options year-by-year over this same period, because there is no hard data to go on. We can look back at 1990 and estimate roughly a million option holders and look at the present day and estimate roughly 10 million option holders, but it is impossible to accurately say how many employees held options in 1994, 1995, 1996, 1997, etc. Why? ESOPs are highly regulated retirement plans, and companies with ESOPs must tell the government every year how many employees are in the plan. The government regularly publishes summaries of this data. Although it is imperfect, it gives us something to go on. For stock options, on the other hand, nothing of the sort is available.

Percentage of Company Stock Owned by Employee Ownership Plans

Category	0-10%	11-30%	31-50%	51-100%
Private co. ESOPs	20%	20%	30%	30%
Public co. ESOPs	62%	34%	3%	1%
401(k) plans	85%	10%	5%	0%
Stock options*	32%	65%	3%	0%

*Percentage is for overhang from options (outstanding, unexercised options plus shares available for future grants, divided by common shares outstanding).

Data for this table were drawn from surveys in Ohio and Michigan in 1994 and 1990, a 1995 NCEO survey of 401(k) plans, a 2000 NCEO survey of companies with broad-based stock option plans, and NCEO databases.

Stock option figures are estimates of the percentage of total outstanding company stock that the options represent. Percentages are higher in smaller companies and high-technology companies. We do not have an estimate for employee stock purchase plans.

Employee Ownership and Corporate Performance

This issue is described in detail at this link. Generally, the results show that ESOPs make a significant contribution to corporate performance, particularly when combined with management styles that stress employee involvement in decision-making at the job level and sharing financial information with employees. Data for broad-based stock options also paint a positive picture, although the results are somewhat more ambiguous.

Basic Characteristics of ESOPs

% of Private Companies Passing Through Full Voting Rights	20%
% of Majority-Owned Private Companies Passing Through Full Voting Rights	40%
Mean Allocation to Accounts, as a % of Payroll (Private Companies)	8-10%
Mean Allocation to Accounts, as a % of Payroll (Public Companies)	4-6%
Median Number of Employees, Private Companies	125
Mean Number of Employees, Private Companies	1,460
Median Number of Employees, Public Companies	2,100
Mean Number of Participants, Public Companies	13,984
Percentage of ESOPs That Are in Public Companies	5%

Data for this table were compiled from Ohio and Michigan studies, NCEO databases, and studies by Michael Conte at the University of Baltimore.

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Related Publications

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