More Employees Value Stock Purchase Plans

July 2, 2014 ( – Employee stock purchase plans (ESPPs) are increasing in importance when it comes to employee retention and recruiting, says a new study from Fidelity Investments.

When asked about the importance of company stock plans as part of their compensation and benefits package, 86% of respondents under the age of 40 say they would want their new employer to offer a company stock plan if they changed jobs. In addition, 40% of all respondents consider a company stock plan as a must-have when making a decision to change employers, and over one-third of respondents (37%) say that giving up their ESPP would make it harder for them to leave their current job.

A rebounding job market has intensified the competition for talented workers, says the study, and employee retention has emerged as one of the top corporate human resource challenges for 2014. More employers are using ESPPs to attract and retain employees at all levels, from senior executives to recent college graduates.

Nearly one-third (29%) of employees consider an ESPP as one of their most valued benefits. In fact, 10% of respondents ranked an ESPP as a more valued benefit than others such as health care, 401(k), dental plan, and child care.

“The availability of a company stock plan can tip the scale in a company’s favor when employees are evaluating job opportunities, especially in industries that demand highly skilled or specialized workers,” says Kevin Barry, executive vice president of stock plan services at Fidelity Investments, based in Boston. “Employers who recognize this fact will be well positioned to attract and retain the best employees for their business needs.”

The study also finds that ESPPs can strengthen employee loyalty, as well as increase productivity and engagement. More than half of employees (57%) say equity compensation plans contribute to their feeling loyal to their employer, and 54% indicate their company stock plan “provides an incentive to work harder and be rewarded for the company’s performance.”

In addition, the study found employees participating in ESPPs are highly engaged in their companies’ performance, with 89% of respondents knowing the current price of their company stock, and 85% knowing the overall value of their stock plan assets and their vesting schedule.

Company stock plans, such as ESPPs, are increasingly used as supplemental savings vehicles that can be easily accessed and used for nonretirement expenses, without any fees or Internal Revenue Service penalties, according to the study. Company stock has been playing a growing role in meeting workers’ ongoing financial needs, with 34% of respondents saying they liquidated when their company stock hit a certain price, while 60% have sold company stock to generate funds.

“Today’s workers increasingly understand that a company stock plan is a great savings option to complement their traditional workplace savings plan,” says Barry.