Many employees who choose to participate in an equity compensation plan see the value, but are too afraid to exercise employee stock options or sell shares to take full advantage of the benefit, says the latest survey from Schwab Stock Plan Services.
While 36 percent say equity compensation is one of the main reasons they took their job, 48 percent of participants said they are afraid of making a mistake when exercising stock options or selling shares. The majority of respondents (80 percent) said working with a financial advisor would significantly improve their confidence in exercising their compensation benefits.
Equity compensation plans play a large role in employee loyalty. Three-quarters of respondents consider the benefit a major part of their long-term financial plan, while 63 percent say their equity compensation makes them feel more secure about their retirement preparedness. Twenty-eight percent said they would not consider leaving their job until after the next vesting event at their company, while 11 percent said they would not consider leaving at all, according to the study.
Employer-provided resources could help employees use their equity compensation effectively. Getting advice on the tax implications of their choices (50 percent) and knowing when to exercise or sell their equity awards (44 percent) were top concerns for respondents. Thirty-four percent are worried about selling under the wrong market conditions, according to the report.
Sixty-six percent of respondents whose employer offered a financial wellness program used the service, and 96 percent said they found the program helpful when it was time to make equity compensation decisions. However, only 43 percent of respondents’ employers offered the service.
Employees say they would take advantage of financial programs if their employers offered them. Employees said they were most likely to use the service for help planning for retirement (65 percent), free or discounted consultations with a financial advisor (51 percent), help building personal wealth (45 percent), help developing savings goals (44 percent), and guidance on how to use equity compensation efficiently (35 percent).
Overall, workers feel that equity compensation is beneficial to their financial confidence. Seventy-six percent of respondents say the option helps them feel less stressed about their finances, according to the report. Likely because of being closer to retirement age, baby boomers (84 percent) and Gen Xers (81 percent) are more likely to consider equity compensation as a part of their long -term financial plan then millennials (31 percent). Employees believe equity compensation will help them significantly build wealth (55 percent) and participate in the growth of the company (52 percent), while having greater control of their finances (44 percent).
The study was conducted by Koski research on behalf of Schwab Stock Plan Services in September. One thousand equity compensation plan participants who receive incentive stock options, restricted stock awards and/or participate in employee stock purchase plans participated. The survey respondents were interviewed and were currently working for companies who offered equity compensation plans or are currently participating in a plan themselves. All respondents were betweem 25 and 70 years old.