New Data Show Rapid Growth of Broad-Based Stock Options

A new survey of 1,108 companies by ShareData, a provider of software to administer employee stock option plans, shows a rapid increase in the growth of plans that provide stock options to most or all employees. The study indicated that 53% of respondents said they offered stock options to all employees. In information technology fields, the percentage soars to 88%, with manufacturing at 41%, and financial services at 24%. Other industries are in the 11% to 20% range. The absolute numbers in the survey are substantially higher than in other surveys, no doubt due to sampling differences and the fact that respondents may be calling a section 423 stock purchase plan a stock option plan.

The survey is most useful in the trend data it provides. Sampling biases drop out here, because the same technique was used in ShareData's 1994 study. In 1994, 10% of respondents with between 2,000 and 5,000 employees offered options to all employees; in 1997, 44% did (this compares with only 11%, however, in a 1997 William Mercer study of very large companies). In 1997, 51.3% of companies with 500 to 999 employees offered options to everyone, compared to 30% in 1994.

Whatever the actual numbers may be, there can be no question that the practice of granting options broadly is growing at a remarkable pace.