Despite the recent
setbacks in the stock market, equity participation programs are still prevalent
in a majority of companies, according to a recent e-mail survey by WorldatWork.
The Stock Program
Participation Levels survey sought gauge how many participants companies
had in their equity programs and how many companies were offering them. According
to the survey, 66 percent of responding companies offer either stock options
or performance units. Of those companies, 66 percent offer broad-based plans,
but in only 36 percent of the companies were all employees eligible for their
program.
Equity programs are
more prevalent the larger a company gets, with 77 percent of companies with
more than 10,000 employees offering equity programs. Of companies with 2,500
to 9,999 employees, 73 percent offer programs; 60 percent of companies with
500 to 2,499 employees and 53 percent of companies with fewer than 500 employees
offer programs. However, the smaller companies (500 or fewer) and the largest
companies (more than 10,000) are more likely to offer broad-based plans, with
73 percent and 78 percent respectively.
The most prevalent
basis for granting options is by a set number of options, with 65 percent of
respondents using this format for granting options. This does not change by
the size of the company; but the larger a company is, the closer the ratio of
granting by a set number of options is to granting by the value of the option.
Black-Scholes is
still the predominant way for determining the value of stock option grants,
with 64 percent of companies determining value in this way. Of those responding,
72 percent felt their program is working in attracting and retaining key talent.
All Companies
Question
1
Does your company have one of the following: (If no, skip to question 10.)
Stock Options
Performance
Units
None of the
above
62%
4%
35%
210
13
Question
2
Does your company have a broad based stock/unit compensation plan? (If no, skip to question 10.)
Yes
No
66%
34%
Question
3
Are all employees eligible?
Yes
No
36%
64%
Question
4
What employee groups are eligible for the program?
Yes
No
Upper Management
82%
18%
Middle Management
74%
26%
Supervisors
55%
45%
Professional
Staff
61%
39%
IT Staff
59%
41%
Sales
53%
47%
Technical
Staff
50%
50%
Administrative
Staff (non exempt)
35%
65%
Contract Employees
2%
98%
Part-time
Employees
20%
80%
Question
5
How is the minimum criterion for participation determined for the following categories of employees? (Select only one per category.)
Title/Position
Grade/Classification
Salary level
(actual dollar)
Not Eligible
Upper Management
33%
62%
2%
2%
Middle Management
28%
64%
3%
5%
Supervisors
25%
56%
3%
16%
Professional
Staff
24%
61%
4%
12%
IT Staff
26%
59%
6%
10%
Sales
27%
51%
5%
17%
Technical
Staff
21%
55%
4%
20%
Administrative
Staff (non exempt)
18%
30%
4%
47%
Contract Employees
2%
1%
1%
95%
Part-time
Employees
25%
0%
50%
25%
Question
6
How are the number of shares or units determined per employee group?
Individual
performance
Department/divisional
performance
Company performance
Upper Management
58%
7%
35%
76
Middle Management
62%
10%
28%
74
Supervisors
61%
12%
28%
57
Professional
Staff
63%
8%
29%
63
IT Staff
63%
9%
28%
64
Sales
62%
10%
29%
58
Technical
Staff
60%
10%
31%
52
Administrative
Staff (non exempt)
52%
13%
35%
33
Contract Employees
40%
27%
33%
6
Part-time
Employees
56%
14%
31%
20
Question
7
What are your current grant guidelines based on?
Value of
option*
Set number
of options**
*number of options changes
with the value of option
35%
65%
**regardless of current stock
price or option value
Question
8
If your grants are based on value, what is the value based on?
Black-Scholes
valuation model
Growth assumption,
discounted to present value
Number of
options based on share price at grant
64%
9%
27%
45
6
Question
9
Do you feel your stock option program is working in attracting and retaining
you key employees?
Yes
No
72%
28%
Question
10
Is your company considering expanding your stock option program in the next
year?
