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BOSTON — For many people, their most important workplace benefit is a 401(k) or health insurance, but for a growing number of employees, a company stock plan is their top benefit. According to research1 from Fidelity Investments®, 16 percent of employees say company stock is their most important benefit, up from 10 percent in 2014.
For employers, company stock plans can help attract and retain top talent. Almost two-thirds of employees (63 percent) said that participating in their company stock plan gives them a sense of ownership of the company, and 53 percent said it makes them feel more loyal to their employer. Nearly half of employees (49 percent) said that a company stock plan was an important factor when considering a new job.
“Company stock plans can be a great tool to engage employees and improve their overall financial confidence,” said Kevin Barry, executive vice president, Stock Plan Services at Fidelity Investments. “These plans can also motivate employees, as over half of respondents indicated participation in their company stock plan increases company loyalty and inspires them to work harder.”
Employees using company stock to deal with major expenses, avoiding home/401(k) loans
Fidelity also examined how company stock can help employees tackle major expenses. Fifty-eight percent of people surveyed said they would pay for a major expense by selling company stock instead of borrowing from their 401(k) or taking a home equity loan. While there may be tax implications to selling company stock, it can be more cost efficient in the long run than tapping your retirement account or borrowing against your home.
The survey also indicated that employees are not dependent on company stock to fund their retirement. While 40 percent indicated that assets from company stock will play a role in funding their retirement, only 7 percent said that they expect those assets to be a primary source of retirement savings. Forty-two percent of employees indicated that assets from company stock will be more of a “cushion” alongside other savings vehicles.
Most employees expect the value of their company stock to increase
Most employees are optimistic about the future performance of their company stock. Eighty-three percent of employees who participate in their company stock plan expect the value of their company’s stock to increase over the next few years. More than half of employees surveyed (52 percent) indicated that they expect the value of their company’s stock to increase at a modest rate, and more than one in five (21 percent) employees expect the value to increase substantially in the next 12 – 36 months.
Employees are also holding the stock they acquire through their company stock plan. Of the 49 percent of those that sold stock they acquired through their plan, 40 percent held the stock for more than two years.
“Employers need to be more competitive to attract and retain the best and brightest, and a company stock plan can be a key ingredient in helping employers win in a competitive labor market,” added Barry.
About Fidelity Investments
Fidelity’s goal is to make financial expertise broadly accessible and effective in helping people live the lives they want. With assets under administration of $5.6 trillion, including managed assets of $2.1 trillion as of July 31, 2016, we focus on meeting the unique needs of a diverse set of customers: helping more than 25 million people invest their own life savings, nearly 20,000 businesses manage employee benefit programs, as well as providing nearly 10,000 advisory firms with investment and technology solutions to invest their own clients’ money. Privately held for nearly 70 years, Fidelity employs 45,000 associates who are focused on the long-term success of our customers. For more information about Fidelity Investments, visit https://www.fidelity.com/about.
1. Survey conducted for Fidelity by CMI of 2,114 stock plan participants, both US (total: 1,369) and international (total: 745). CMI sent invitations and up to two reminders between March 14 and April 13, 2016. Surveys were collected through April 22, 2016.