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This article summarizes recent equity compensation participant surveys / research and describes how financial advisor guidance programs can significantly decrease stock plan perception and education gaps.  Advisor based programs enable companies to maximize their investments in equity compensation by assisting plan participants to fully understand, appreciate and get the most out of their company stock and option grants.  This article also provides advisory firms with a process for engaging executives, establishing relationships and providing structured 1-on-1 assistance.

Research and Surveys:

Current academic research and plan participant surveys indicate that despite improvements in stock plan education, there are still significant value perceptions and education gaps.

  • Academic Research on Subjective Valuation of Stock Options. This peer reviewed academic study showed that on average recipients perceive the “Forfeit Value” of their options to be 40% less than the cost to the company. The study concluded that this discrepancy can be eliminated with personalized education that explains option fundamentals and articulates the value of the recipient’s holdings.
  • E*Trade: 2014 Annual Stock Plan Participant Survey. Found that understanding of stock plan value has increased but is still weak because just over half report a good understanding of the relationship between their company stock price and their award value. It also found that the understanding of stock plan features has improved, however when it comes to more sophisticated topics like knowing when to take action on awards, there’s plenty of room for education. Companies are providing sufficient detail on the plan itself but, participants need to understand the role it plays in their financial life.
  • UBS: 2014 UBS Participant Voice Report. This report revealed that 60% of employees do not place significant value on their equity awards. One of the core actions companies can take to improve employee perception is by providing personalized education and advice. Personalized advice contextualizes equity compensation as part of a participant’s overall financial situation and causes them to place more value on their equity awards.
  • Fidelity Stock Plan Services: Participant Research Global Results 2014. Showed that participants are turning toward a greater number of resources for investment information. All potential sources have seen an increase in the number of participants who utilize them with the exception of individuals who rely solely on themselves. Participants utilizing information from financial advisors increased from 33% in 2012 to 45% in 2014.
  • Morgan Stanley: Attitudes and Behaviors of Stock Pan Participants. This survey found there is considerable room for improvement when it comes to incorporating company stock into a full wealth plan. This was true for the whole group, even senior executives who are most knowledgeable about their plans. 38% of respondents felt that 1-on-1 meetings with financial advisors would be an effective way of receiving guidance & education.


  1. To close the education and value perception gap companies need to implement “personalized” programs that provide participants with specific information about their grants and financial situation.
  2. Companies are generally unwilling and/or unable to provide plan participants with advice on exercising and selling their Company stock and options. By offering optional access to financial advisors who have expertise in equity compensation, financial planning and investments, companies provide a highly desirable service to employees to address their overall financial situation.
  3. Employees who know their Forfeit Value (the value they lose upon pre-retirement termination) are less likely to leave the company. Having their Forfeit Value in mind before they are recruited is essential to minimized undesired attrition of key personnel.
  4. Providing employees with a personalized analysis of their equity compensation and access to a financial advisor will enable them to understand the full value and wealth building power of their company stock and options. This will motivate employees to help the company achieve its business objectives.

Proposed “Opt-In” Equity Compensation Assistance Program:

Company notifies appropriate employees of an optional benefit that will provide them with a personalized equity compensation report and 1-on-1 consultation. Employees that opt-in to the program will be contacted by the advisory firm to gather a few planning assumptions and schedule the meeting to review and discuss the concepts contained in their report including:

  • Intrinsic and after tax valuation for their stock options, restricted shares/units and owned/long shares
  • Stock option and total “Forfeit Values” (the value left behind if the employee leaves the company prior to retirement)
  • A leverage analysis (the percentage increase/decrease in the total value of their options and company stock given an X% change in stock price)
  • Concentration analysis (chart showing values and percentages of shares and options compared to the value of their other investments)
  • Financial goal attainment (indicates the approximate company stock price to reach a financial goal)
  • Decision metrics to help determine when to exercise and sell (i.e. Insight and VaR Ratios and Share Concentration Percentage)

Reasons Why Companies Should Sponsor this Program:

Providing equity compensation recipients with discretionary access to a personalized analysis and a financial advisor will significantly reduce their current perception and education gaps. It will also provide them with additional financial education and guidance. Equity compensation recipients often seek such guidance from the Company’s human resource or finance departments, and this program provides a means for them to obtain it at arm’s length from the Company. Employee satisfaction is measured via surveys and the results are provided to the company. Bottom line, this program fortifies retention and motivation, provides assistance to key employees, and requires almost no investment of resources by the Company.

Reasons Why Participants Should Opt-In:

Individuals that opt-in to this assistance program will receive a Personal Equity Compensation Profile and a review session with a financial advisor that specializes in equity compensation analysis, financial planning and investments. There is no cost or obligation to participate in this program and the consulting advisor will only offer additional services or products based on need or interest. The report and consultation will provide participants with unique insights, concepts and ideas regarding their company stock and options which will facilitate informed and profitable decisions.


Similar executive assistance programs offered by financial services companies have shown that over 50% of the participants “opt-in” to these programs and over 50% of these people become clients.

Program Marketing Material:


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  1. One on one education and assistance from financial advisors would likely cost companies little or nothing because advisors want to establish relationships with equity compensation recipients and would provide an initial review for gratis.

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