Employee Attitudes Toward Stock Options: An NCEO Survey

A new NCEO study provides insights into how employees perceive stock options. The research was partially funded by Watson Wyatt & Company and was conducted by Katherine Klein of the Wharton School of Business, along with Archie Bates, Anuradha Ramesh, and Ed Carberry (Katherine and Ed are both former NCEO employees).

The study faced a major hurdle in that it was conducted primarily during 2002, a time when many companies were facing declining stock prices and uncertainty about future equity plans. Consequently, it was very difficult to get companies to agree to participate. The study has two parts, one on public companies and one on private companies. The public company data analysis is now being completed.

The sample consisted of eight diverse companies with 1,176 responding employees, with a range of 33 to 301 respondents per company. A series of indexes was created based on multiple questions probing organizational commitment, ownership behavior (thinking about what can be done to improve company performance, checking stock values, and seeking out information on the company), satisfaction with options, expected financial benefits from options, the belief that individual performance is fairly rewarded with options, perceived understanding of options, and various measures of how well the employee expects to do because of the options.

The table below looks at responses to some of the some of the key questions we asked on motivation and understanding: