UBS Wealth Management Americas, a division of UBS AG, introduces the UBS Equity Award Value Index(TM), a groundbreaking tool for measuring how employees perceive the value of their equity compensation.
Each year companies grant more than $110 billion of equity compensation.* But how much do employees value these awards? To find out, UBS surveyed almost 600 participants from a cross-section of industries, companies and service providers. The resulting UBS Equity Award Value Index explains how employees view their equity based on five variables:
1. View of equity compensation
2. Importance in taking a job
3. Importance for staying at a company
4. Importance in accumulating wealth
5. Importance of incorporating equity compensation into long-term financial planning
The survey found that the more vesting experience employees have with awards, the more they value them. In fact, three critical "tipping points" of experience were identified:
≥ 6 vestings: The equity is viewed as a way to build wealth.
3-5 vestings: The equity is viewed as a paycheck supplement.
<3 vesting: The equity is viewed as a lottery ticket.
The Value Index shows that 26% of participants perceive high or considerable value from their equity, with 21% perceiving no value. In addition, nearly half of all participants (47%) view their equity awards as a way to build wealth, while many (36%) view them as a paycheck supplement, and the remainder (17%) view them as a "lottery ticket".
The findings published in the UBS Participant Voice dive deeper into the characteristics that define the three distinct participant types, from how they feel about their personal finances to how they work with financial advisors.
*Equilar, Inc. Based on 2,885 companies in the Russell 3000 that have fiscal year-ends of July 31, 2012 or more recent, and valued the grant-date fair value of options, stock appreciation rights, restricted stock and stock unit awards granted by companies during the most recent fiscal year. All information was pulled from the 10-K and was calculated using company disclosed figures for grant-date fair value.