New Charles Schwab Study Looks at Trends in Equity Compensation in Large Companies

A new study of 200 large companies by Koski Research for Charles Schwab shows that companies retain a strong commitment to equity compensation at all levels. Stock options remain the most popular form of reward, with 71% of the companies offering this benefit. Sixty-five percent offer employee stock purchase plans (ESPPs), 64% restricted stock, and 51% performance shares. One-quarter of the plans offer stock options or performance shares to non-management employees; 17% offer restricted stock. The study did not indicate what percentage of these employees were eligible, however, nor did it indicate how many companies offer more than one plan to non-management employees.

Companies report that employees below the executive level have only a limited understanding of the plan, perhaps because most of the information is passively communicated in brochures or on Web sites. Only 37% of the companies have live meetings on the plans, and 25% have one-on-one meetings with plan providers. The survey did not report what percentage of employees actually are invited to either of these kinds of meetings, however.

The market downturn has had no net impact on the prevalence of performance shares, but there was a net drop of 10% of companies using options and a 12% drop in those using restricted stock. Fifty-six percent of companies say participation in ESPPs has stayed the same (39%) or increased (17%), while there has been a decrease in 44% of the plans. Thirty percent of the companies say they are going to try to increase ESPP participation, while 15% plan to make less effort to do so.

The study, "Taking Stock: Examining the Role of Corporate Stock Plan Benefits in the Workplace," is available at this link.