ABC Pleads for Option Rules Changes

February 28, 2001 ( - Legislation should be changed to encourage wider access to stock ownership and option granting programs, according to a new study by the American Benefits Council (ABC).

The new study, “Taking Stock in Employee Benefits,” contends “the failure of the law to reflect the current landscape stifles new stock plan formation” and also “creates burdens” for workers to opt into stock programs.

This is happening even though options programs – in the form of 401(k), employee stock ownership programs, and stock purchase programs —  are being offered to rank-and-file employees, as well as top executives.  Hampering options programs now would curtain the competitiveness of corporations competing for workers in a global economy, the study said.

Plans Expanding

The study also noted that between seven and 10 million employees are enrolled in stock options programs and 39% of major companies now have options plans which cover half their workforce, up from 17% in 1993.  

A survey done in 2000 of 345 companies that grant stock options found that 47% do so to employees who are exempt under the Fair Labor Standards Act.  And that trend is expected to continue, the survey said, as 51% of corporations (ranging from start-ups to Fortune 500 firms) said they plan to expand their options programs.

Monetarily, the study found the average annual value of stock option  grants was about $1,800.

What employee groups receive

The report also covered  which types of stock-based plans were the most popular among certain employee groups. 

Among those results were the following:

  • 57% of non-exempt hourly non-union employees receive company stock through 401(k) plans;
  • 62% of non-exempt salaried employees receive company stock through 401(k) plans;
  • 65% of exempt salaried employees  receive stock options;
  • 92% of officers and executives received stock options.