The Employee Ownership Update
May 31, 2007
ESOPs Continue Growth in 2006Based on data from the Department of Labor and the IRS, the NCEO estimates that in 2006 that the number of ESOPs and stock bonus plans grew by approximately 5% over the 2005 numbers. Plan assets grew to approximately $675 billion, up about 12% from the prior year. We estimate that about 800 new plans were set up in 2006, but approximately 350 were terminated. As a result, we estimate that there are about 9,650 ESOPs and stock bonus plans with about 10.5 million participants. Some of these plans, however, have no current assets.
New Data Show About One-Third of U.S.-based Multinational Equity Compensation Companies Make Foreign Employees Eligible for OptionsA new survey of 291 U.S.-Based multinational companies that offer equity compensation to their non-U.S. employees shows that 30% of the respondents make all employees eligible for stock options or stock appreciation rights (SARs) awards while 62% offer employee stock purchase plans (ESPPs). About 10% of the companies make non-exempt employees eligible for other forms of equity as well, most commonly restricted stock units. The median participation in the ESPPs by non-U.S. employees was 15%. Not all employees eligible for options or other awards will actually receive them. About two-thirds of non-exempt employees eligible for non-option grants actually receive them, while about 70% of those eligible for options do, and one-third of those eligible for SARs do.
There has been less change in eligibility than many people expected. About 45% of the companies have not changed the eligibility for their option plans since the plans' inception. Among those changing their plans, slightly more have broadened eligibility than shrunk it. When asked the question in a different way, a somewhat different response emerges, however. About 24% of the companies overall say they have limited eligibility for equity to top executives in response to changes in accounting rules, although it is not possible to tell from this what percentage of these companies had granted truly broad-based equity compensation before as opposed to just having plans in place that in theory would have allowed them to grant equity to all workers.
In China, 50% of the respondents said that they provide options or other equity awards to most employees, perhaps reflecting the strong interest in broad-based ownership plans in that country.
The survey was conducted in 2006 by the National Association of Stock Plan Professionals and Deloitte Tax LLP.