Equity Compensation: Who Gets What?

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By Corey Rosen, NCEO Senior Staff Member
April 2009

There seems to be a lot of confusion right now about just how many people are getting stock options, restricted stock, phantom stock, and stock appreciation rights and how much they are getting. The truth is, no one can be exactly sure. There is no reporting system for these grants that could provide a reliable data source. So the NCEO has constructed estimates based on studies by the Bureau of Labor Statistics, the General Social Survey, and various consulting firms.

How Many People Are Getting Some Form of Equity Compensation?

Until the early 2000's, we could only make crude estimates of the number of people getting stock options (few people were getting other forms of equity compensation at the time because of accounting rules. We estimated in 2000 that approximately 7 to 10 million employees held stock options. In 2002, the General Social Survey (GSS) provided more comprehensive data, and the survey was repeated in 2006 and 2010. Starting a few years ago, the Bureau of Labor Statistics (BLS) also started including stock options in its annual national compensation survey. These data provided us with a much better picture of who is getting options, but the surveys did not ask about other forms of individual equity compensation. It still is difficult to know much about other forms of equity, although some very broad conclusions can be drawn from private surveys.

In 2002, the GSS survey indicated that about 13 million employees held options. That number dropped to about 10.6 million in 2006 and dropped slightly again in 2010 to 9.3 million in 2010. The early GSS data reflected the peak of the broad-based options trend, fueled in part by the dot.com boom as well as by a number of very large companies that gave out a nominal amount of options in one-time grants. Most of this latter group stopped giving out the awards when new accounting rules required options to show up as a compensation expense in years after 2005. Since then, despite widespread predictions that broad-based option plans would largely vanish, the number has held very steady.

What we are much less certain about is how many people are getting restricted stock, phantom stock, or stock appreciation rights in place of options. The best data on this topic come from a 2007 survey of 383 mostly large public companies by the National Association of Stock Plan Professionals and Deloitte Consulting. The survey found that 39% of companies make their non-exempt employees eligible to receive some kind of stock option or stock appreciation right. In those companies, 76% of eligible non-exempt employees actually do receive awards. In companies that offer restricted stock, restricted stock units, or direct stock grants that are not in lieu of cash (a few substitute stock for cash), 29% of employees are eligible overall, and 52% of these actually receive grants. Based on this, we estimate that several hundred thousand employees are receiving some kind of equity award other than options.

Who Gets How Much?

The best data on this topic come from the BLS 2008 survey, as detailed in the table below.

Characteristic	Percentage Receiving Options
Employee type
Manager or professional	14%
Office support staff	9%
Production staff	8%
Wage level
Wages under 25th percentile	4%
Wages between 25th and 50th percentile	7%
Wages between 50th and 75th percentile	9%
Wages between 75th and 90th percentile	12%
Wages between 90th and 100th percentile	18%
Industry
Manufacturing employee	11%
Construction employee	1%
Service employee	8%
Information employee	23%
Finance employee	21%
Number of employees
Company has fewer than 100 workers	4%
Company has more than 100 workers	13%

The only useful data on who gets how much come from the GSS 2010 survey, which indicated that the median holding is about $11,000. The median tells what a typical employee has; the mean is highly skewed by grants to higher paid people.

What Companies Provide Broadly Granted Options?

Unfortunately, we have no very reliable data on this issue. WorldatWork used to survey companies about whether they provide broad-based awards, but stopped in 2002, when about 12% of public companies did. A 2005 study of venture capital backed companies showed that 85% gave options to most or all employees. We would estimate that about 8% to 10% of public companies now provide broad-based equity plans (that is, make most or all employees eligible), but that is only a very rough guess.