More than half (51%) of the companies surveyed by Fidelity Investments indicated they intend to modify their employee stock purchase plan at some point in the next two to three years, with nearly one-third (31%) of employers either introducing or increasing the employee discount on company stock—usually between 10% and 15%—or adding a “look back” provision to help employees buy shares in their company at a lower purchase price.
These intended changes are in sharp contrast to some of the downgrades many plan sponsors made to their employee stock purchase plans over the last few years. According to the study, 71% of the employers that made a change to their employee stock plan indicated their changes were a result of the recent economic downturn. Some of these changes included lowering or eliminating the employee discount on stock (14%), shortening the “look back” period (6%) or removing the look back provision altogether (5%).
The survey found that 50% of employers consider their employee stock purchase plan part of the company’s benefits package, as opposed to a form of compensation or other benefit. Nearly three quarters (72%) of employers consider the employee stock purchase plan to be as valuable as pensions and dental benefits and more valuable than company-provided life insurance. More than one-quarter (28%) felt their employees value the company’s plan more than other company benefits.
When asked what results they hoped to see from changes to their plan, 41% of employers surveyed responded they were strengthening their plan to attract talent in an increasingly competitive hiring market. One-third of employers (33%) indicated they hoped the enhanced plan would help retain valued employees, and 45% felt improvements to the employee stock purchase plan would motivate their workforce and improve morale.A 2012 Fidelity survey found the majority of company stock plan assets (57%) are being earmarked for eventual investment or retirement savings after participants sell them (see “Stock Plan Participants Earmarking Assets for Retirement”).
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