A recent survey of 2,116 employees who participate in company stock plans outside of their 401(k) found that 40% consider those plans a “must-have” benefit. More than half (57%) say that these plans contribute to their loyalty to their employer, and half (54%) say the plans provide an incentive to work harder and be rewarded for the company’s performance. Company stock plans include purchasing company stock at a discount and grants of employee stock options and/or company stock.
“In today’s environment, employees realize that company stock plans can represent significant wealth accumulation,” says Emily Cervino, vice president of Stock Plan Services for Fidelity Investments. “When the stock market is up, there can be a halo effect over the company stock plans, and it can increase the value that is delivered to employees.”
Additional findings of the survey:
- 89% know the current price of their company’s stock, and 85% know the overall value of their stock plan assets and their vesting schedule.
- 29% consider their company stock plan one of their most valued company benefits, and 10% rank their company stock plan as their most valued benefit over their health care plan, 401(k) and other benefits such as a dental plan and child care.
- 37% say that giving up their company stock plan would make it harder for them to leave their current job.
- 86% of respondents under 40 say they would want a new employer to offer a company stock plan if they changed jobs.
Company stock is an effective way for employers to compensate their employees and align employees’ interests with shareholders’ interests, Cervino says.
Employee stock purchase plans are optional so employees really need to learn about them and understand how they work, she says. “There may be an opportunity for employees to purchase stock at a significant discount.”