Companies Enhancing Stock Plan Offerings, According to Charles Schwab Study

New Study Shows Employers Are Using Equity to Motivate Workers, But More Education Needed for Rank-and-File

Tuesday, November 10, 2009 6:00 am PST



Public Company Information:


SAN FRANCISCO--(BUSINESS WIRE)--Charles Schwab today released a new corporate stock plan study revealing that most companies view stock plans as an important tool to motivate and reward workers at all levels. Despite market uncertainty, a majority of companies surveyed say they are offering the same or even more stock plan benefits to their employees since Fall 2008.

Earlier this fall, Schwab commissioned a survey of 200 corporate stock plan decision makers from companies around the country and across a broad range of industries about the role of stock plans in the workplace and their perceptions of stock plan features and benefits. Key findings include:

  • Stock plan benefits remain intact and are growing for many: one in four respondents (25%) says their company plans to increase stock plan benefits in the next year; 68 percent plan to maintain benefits at the current level.
  • These benefits are not just for senior-level employees:
    • Half (50%) of participating companies now offer performance shares to manager-level employees.
    • Nearly half (48%) offer manager-level employees stock options and one-third (34%) award restricted stock to managers.
    • More than a quarter offer performance shares (26%) and/or stock options (27%) to employees below the manager level, and 17 percent award restricted stock to this group of employees.
  • Plans are targeted more toward existing employees than recruits: motivating employees to support the success of their company (65%) and giving employees a sense of ownership in the company (58%) were most commonly cited as reasons for offering these benefits; just 12 percent saw them as a key recruiting tool.

Across all employee groups, the survey found today’s most common stock plan offering is stock options, which are options to purchase company stock at a specified price. They are granted by 71 percent of responding companies, followed by:

  • Restricted stock (64% of responding companies)—stock issued to employees that typically vests over a period of time.
  • Performance shares (51% of responding companies)—stock issued to employees based on corporate performance.

Yet the balance may be shifting to performance-based rewards, according to the survey data. Nearly eight in 10 (77%) respondents are granting more or the same number of performance shares, while 69 percent are issuing more or the same number of restricted stock and 64 percent are distributing more or the same number of stock options.

“Our survey shows that companies are continuing to employ and expand different types of stock plan programs to reward employees across the company, largely as a motivational tool to build loyalty among existing employees,” said Larry Bohrer, Charles Schwab Stock Plan Services vice president.

Need For Education

As companies offer more types of stock plan awards to a wider group of employees, the need for more comprehensive stock plan education appears greater than ever. Using an academic scale to grade the level of understanding about the company stock plan, 36 percent of respondents gave their non-executive employees a “C” grade. Executive level employees received higher marks from survey respondents, but still only 55 percent of respondents gave their executives an “A” for their level of understanding of company stock plans.

Schwab found nearly half of survey respondents (48%) consider educating employees about the features and benefits of their stock plan a “significant challenge.” But they are poised to take on the challenge: 78 percent say that educating employees on the stock plan value and benefits will be an important focus for their company during the next two years. In fact, these employers have already begun to deploy a variety of educational activities to increase employee knowledge of the benefits and workings of their company stock plan, such as:

  • Including information in new hire benefits information packets (64%),
  • Providing information on the employee Web site (63%),
  • Including stock plan information details in any discussions of overall employee benefits packages (59%), and
  • Scheduling one-on-one employee consultations with the stock plan provider (25%).

“Because equity compensation plans are more complex than traditional compensation programs, they require a more robust educational effort. Employers who take steps to increase understanding of these plans across their employee base will be more likely to reap the rewards of a more motivated and engaged workforce,” said Bohrer.

Employee Stock Purchase Plans (ESPP)

To further increase employee ownership, employers are also aiming to boost participation in employee stock purchase plans (ESPP), which often allow employees to purchase company stock at a discounted price. Sixty-five percent of company respondents currently offer an ESPP to their employees. Eighty-six percent of those companies make their ESPP available to manager-level workers and 81 percent offer an ESPP to other lower-level employees.

Despite market volatility, employees appear to recognize the intrinsic value of the ESPP. More than half of survey respondents (56%) say ESPP participation has increased or stayed the same since the market downturn, and 30 percent of employers are making more efforts to increase employee participation in the ESPP.

“The ESPP can be an effective way to reward employees and create an ownership culture,” said Bohrer. “Our survey shows that a significant percent of employers are looking to increase participation in ESPP plans as an important piece of their overall benefits package for employees.”

Additional information about Charles Schwab Stock Plan Services is available at

About the Study

In September 2009, Koski Research conducted an online survey and gathered a total of 200 responses from stock plan decision makers at public companies ranging from $25 million to more than $50 billion in revenue. Respondents work for companies in a broad cross-section of industries with the manufacturing, technology, and financial services industries particularly well represented. Koski Research is not affiliated with Schwab.

About Charles Schwab

The Charles Schwab Corporation (Nasdaq:SCHW) is a leading provider of financial services, with more than 300 offices and 7.6 million client brokerage accounts, 1.5 million corporate retirement plan participants, 667,000 banking accounts, and $1.36 trillion in client assets as of September 30, 2009. Through its operating subsidiaries, the company provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Named Highest in Self-Directed Investor Satisfaction in 2009 by J.D. Power and Associates, its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC,, and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through its Advisor Services division. The Charles Schwab Bank (member FDIC) provides banking and mortgage services and products. More information is available at (1109-11691)


Charles Schwab
Michael Cianfrocca, 415-667-0344
Intermarket Communications
Eric Hazard, 212-754-5610

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