Stock Plan Services

Employee opinions on and utilization of their equity stock purchase plan are constantly evolving from year to year. You can use this resource to chart the changes in employee attitudes and behaviors from previous surveys.

2018 Survey Results Webinar

Transcript for 2018 Survey Results Webinar

SUSAN MAYNARD: Hi, everyone. Welcome to today's webinar. This is Susan Maynard from Charles Schwab, and today's webinar is proudly hosted by Charles Schwab Stock Plan Services. We appreciate you taking the time to learn more about our latest employee survey results from Logica Research, who conducted this second annual study of stock plan participant attitudes and behaviors on behalf of Schwab just a few months ago. Before we get started I'm going to run through a few housekeeping items.

There is a widget dock at the bottom of the webcast console, and hovering over each icon will show you what that widget does. If you would like a larger view of the presentation slides, the arrows in the upper right-hand corner of the slide window will maximize it to fill your entire screen. We will be taking questions at the end of the presentation, so you can submit your questions at any time during the webcast. Also, this webinar will be listed in the CEP Institute website so that you can obtain CEP credit. Don't forget to do that. And, finally, please take a moment to fill out the survey which will pop up at the end of the webcast. We really do value your opinions and suggestions for making this survey, and future webcasts, in general, informative and interesting.

Now, I would like to hand the webcast over to our host Crispin Hanshaw who is the managing director here in Stock Plan Services. Crispin will be introducing our speaker today as well as interjecting occasionally with commentary from Schwab, of course. He will lead us through Q&A at the end as well. So, Crispin, it's all yours.

CRISPIN HANSHAW: Hey, thank you, Susan. And good afternoon, everyone. I appreciate all of you taking the time to join us and learn more about the second annual employee study from Schwab. Some of you will remember we presented our 2017 research on a webinar in April of this year, which I know seems like a very long time ago. Well, since that time we've presented the research at various industry conferences, such as the CRTN Summit and the NASP Annual Conference, gathering audience feedback along the way. We also posted that research on a micro site which I'll be mentioning a few times today. On that site, you will currently find the results from our original survey conducted in 2017. Next month, that site will be updated with findings from 2018, which is the content we are unveiling today.

So the URL for this annual study micro site is Again, that's We'll put this on the screen at the end of this webinar, and you'll also see several links to this site on our Schwab Stock Plan Services LinkedIn page. So if you're not already following us there, we invite you to do so. It's a great way to receive updates from us in real-time. To find and follow the page it's simple, just type Schwab Stock Plan Services into the search bar at And one final reminder, we will be taking questions at the end of the session. So as Susan said, please submit your questions at any time during the webcast.

So, now, without further ado, it's time to present our latest findings from a new cohort of one-thousand stock plan participants surveyed in the summer of 2018. I'd like to welcome our main speaker for today, the founder and CEO of Logica Research, Lilah Koski. So Lilah has conducted research in the investment and personal finance space for over 20 years, and is an active speaker, presenter, and writer on customer engagement and insights communication. With a passion for insights, Lilah is driven to help organizations use research to improve people's financial lives. To that end, Lilah started Logica Research, formerly known as Koski Research, to provide companies with a new approach to understanding their customers. Logica's client list includes top global financial services firms, and research conducted on behalf of clients have been published in the media outlets such as the New York Times, the Financial Times, the Wall Street Journal, CNN, and USA Today, in addition to other business and non-tradition media such as Mashable, TechCrunch and GeekWire. Check out Logica's Future of Money Study on where there are blog posts and a downloadable e-book on consumer's perspective on the future of money. So, with that, Lilah, please take it away.

LILAH KOSKI: Thank you so much for that wonderful introduction, and welcome, everyone. I'm Lilah Koski, and I'm super excited to be talking to you today about participant attitudes toward equity compensation and the important role it plays in employees' financial lives and financial well-being.

Today, we're going to be talking to you about three key areas, and they're really all extremely relevant to helping us understand employee participant financial well-being and where equity compensation fits into that. First, we're going to be looking at employees understanding of their equity compensation, then how they use that equity compensation, and then, finally, the role that Schwab and employers can play in helping employees make the most of their equity compensation and improve their financial outcomes.

Before we dig into the results, I'd like to set the stage with the study objectives and the methodology. There were four key study objectives here. We wanted to understand current needs and usage of equity compensation plans among employees. We also wanted to build on that study that we did last year in 2017, so we can continue to identify emerging trends in the financial wellness and equity compensation space, and determine the attitudes and perspectives of participants of equity compensation plans around financial wellness: What does financial wellness mean? Where does equity compensation fit? And what do employees need? And, finally, we wanted to understand how equity compensation fits into employees overall financial picture and the advice needs that they have.

To do this, we did an online quantitative study in July of this year. We surveyed one-thousand adults who are between the ages of 25- and 70-years-old in the United States. They had to work for an employer who offers equity compensation plans, and they also had to be actively participating in those plans. The sample, itself, comes from an independent third-party sample. It's not based on any specific data base and didn't come from Schwab.

So let's start by looking at that first piece, how employees think about their equity compensation, and, in other words, their attitudes and perceptions toward their equity compensation plan. To set the stage here we wanted to understand where equity compensation and financial wellness fits into the overall picture of benefits for employees. To do that, we asked employees to tell us how important different benefits are. And what you're seeing on this page are how those benefits lay out. At the top of the page here you have top tier benefits. And as you might expect, there's where you see health insurance, 401(k) plans and life insurance. And the middle tier benefits are where you see financial wellness and equity compensation, and those fall similarly to the ability to work from home. What you also see is that they're very important. Over 75% of employees we surveyed say that financial wellness and equity compensation are essential or very important to them in terms of the benefits they're offered. And they are above things like gym membership or onsite meals.

When we ask employees why equity compensation is so important we really reveal the meaning of equity compensation in employees' financial lives. Equity compensation allows employees to participate in the growth of their employer. They see their own success as being part of the success of the company. They also told us that equity compensation gives them financial freedom. It helps alleviate financial stress and gives them more control over their finances. And, finally, bigger picture, equity compensation helps employees build their own personal wealth.

Now, when we look at the role equity compensation plays in choosing an employer, it's also very important. What we see here on this slide on the right is that over a third of employees, 38%, would not consider another job until their next vesting event. So their equity compensation is making them loyal. It's making them sticky to their company. Also, over a third consider equity compensation to be the main reason or one of the reasons that they took their job in the first place. And just below that here on the page you see that 60%, six in ten Millennials say that equity compensation was one of the main reasons or the main reason that they took their job in the first place. And we see throughout this study that there are generational differences. This is the first indication here that Millennials are more engaged with an equity compensation. It's also more important to them.

Now, one of the things that came out of our study that we did last year, and the conversations and interviews that I had with equity compensation participants and employees was this aspect that the equity compensation plan really motivates them to work harder at their job. So we wanted to quantify that this year, and we found that half of employees in our study say that equity compensation that they receive motivates them to work harder at their job.

So the next piece here that we're going to talk about is how employees are using their equity compensation. So we want to start out by sharing some numbers here. Employees tell us that they're, on average, 66% vested or they have 66% vested in their equity compensation, and the dollar value they associate with that is $66,000. And if they look at the total value of their equity compensation it's a $100,000. Now, we'll see in several places here on these slides that this presents a significant portion of employees' wealth. These employees in our study, while they're more affluent than the general population, they are not high net worth or super affluent individuals, and this amount of money is making up a significant portion of their wealth overall.

When we look at whether employees have sold or exercised their equity compensation we see that 41% are telling us that they've exercised or sold their company stock, and that's up 17 percentage points from last year, from 2017. Now, when we look at the reasons why they sold we see that current market conditions were one of the top reasons. And just as a reminder, we did field this study in July of this year, so it was important in terms of being favorable market conditions and before a market correction. We also see that people needed the money or wanted the money to make a purchase. And about 25% of employees are telling us that those are the reasons. And that's also what we heard when we talked to employee participants and had interviews and conversations.

So I mentioned a couple slides ago that employees, really, their equity compensation is a big portion of their wealth and overall financial picture. You know, they had 66% of their stock vested, they had $66,000 worth invested stock and $100,000 of value overall. Now, when we ask people to tell us what percent of their net worth or their investment portfolio this is, it's almost 30% of their net worth and their investment portfolio. So that is a lot. And if you look at the slide and the boxes underneath it, you can see that there are, again, these generational differences, with Millennials having more of their overall financial picture, their net worth and their investment portfolio in their company stock. Over 40% of Millennials are weighted in their company stock in their net worth and their portfolio. Now, Crispin, I know that you had some data to add to this point here.

CRISPIN: Yeah. Thank you, Lilah. I mean, it's an interesting dynamic. On the one hand, it shows the loyalty and the long-term outlook for the company's growth, but, on the other hand, you know, having been in this business a long time and doing a lot of research, I mean, Schwab really recommends that you have no more than 10- to 20% of your portfolio held in one company stock. It doesn't matter what stock it is. And that is something to think about and compare, and it's a striking difference, like you said, from the numbers that the data is showing. So just wanted to mention that point.

LILAH: Great. Thank you so much. And we now want to look at how employee participants feel about their confidence in making decisions, and their knowledge about their equity compensation plan.

So let's start with confidence. Overall three quarters of employees are telling us that they feel confident about making decisions in their equity compensation plan if they have the help of an advisor. Now, we also see that over two-thirds tell us they're confident in making decisions just on their equity compensation plan, in general, about balancing equity compensation with other investments, and about using their equity comp to achieve their financial goals. So, overall confidence here is high.

Now, where we start to see a disconnect is in knowledge about equity compensation. So when we ask employees to tell us how knowledgeable they are or how familiar they are with different types of plans we see much lower numbers. So we see that employees tell us that they know a lot when it comes to stock purchase plans. That has the highest knowledge with half of employees telling us that they know a lot about their stock purchase plans, but then the numbers, again, kind of fall off with stock appreciation rights having the lowest amount of knowledge.

So we see a gap there between confidence and knowledge, and we start to see a bit of an inclination of where employees are really going to need help and how important it is to give them education.

Similarly. when we look at how employees see their different types of equity compensation plans fitting in with their total investment portfolio, again, we see a knowledge gap there. Again, stock purchase plans have the highest and stock appreciation rights are the lowest, but lots of room for improvement there.

Now, Crispin, I know you had some other data to add here, as well.

CRISPIN: Yeah. No, this is a great aspect to talk about. So what we're talking about here is this low confidence level that exists, coupled with the fear of making a wrong decision learned from the prior survey, the 2017 survey, illustrates the need for education and one-on-one professional guidance. I mean, clearly, there's a gap there in that understanding. So after participating in an equity award consultation with Schwab, 75% of award holders tell us they plan to take action based on the guidance they received. Again, we strongly believe in the importance of professional advice from planners who specialize in this field, in equity compensation. And, you know, we're happy that we offer this as a broad based program to all stock plan participants.

LILAH: Thank you so much. So now that we've seen that there's this really big importance of equity compensation and employees' financial picture and that there's this gap between confidence and knowledge let's look at where employees need help.

When we look at our survey results, we see three primary areas. Balancing portfolios with equity compensation, so where does that company stock fit and what weight should it have in the portfolio; overall wealth-building; and then immediate financial issues for some employees such as debt that are causing a road block. And, again, we have this quantified in our surveys but we also know this from conversations and interviews that we have with employees.

Now, when we look at where employees are doing their research, again, there is some room for improvement and indication that employees could use some help. Currently, over a third are doing research on their own, about 25% are talking to a financial advisor, and then a smaller percent are going to their employer.

CRISPIN: Yeah. Yeah, and if I may, I mean, we feel like this represents an opportunity for employers to educate their employees on the one-on-one advice options available through their provider. I mean, as you mentioned, the number two sort of biggest issue is wealth creation, and building that wealth with equity comp requires really understanding and navigating all the tax scenarios and implications. And those are things that a one-on-one equity comp-specific advice program can offer. So, again, at Schwab, we offer that kind of advice, as well as overall financial coaching to all participants. Other providers offer this, as well. So the main message here is encouraging those employers to, again, educate your employees on the benefits that this one-on-one advice can really deliver.

LILAH: Great. So taking a look at actual financial wellness programs and our survey participants' engagement in those programs, we see that over a third of employees are offered work place financial wellness benefits and 60%, or six in ten are personally using those.

Now, we also see that those financial wellness programs are most helpful for retirement planning, financial planning, and using equity compensation to reach their goals. You can see here in the chart on the page that half of employees are telling us that planning for retirement is a very useful benefit in their financial wellness program, and then you can see that over a third say using equity compensation to reach their financial goals in a similar percent in terms of how to balance equity compensation with other investments. So lots of room to make these financial wellness programs very beneficial to employees, and they are using these benefits and find them helpful.

Now, we also see that employees are not using their financial wellness programs, and there are reasons for that. The top reason is that they don't think they need financial advice. Now, layering on my interpretation here where we saw the disconnect between confidence and knowledge, I would argue that they probably don't know the kind of financial advice that they do need. We also see over a quarter say they're more focused on immediate financial issues like debt, and that also had come up in the interviews that I had with employee participants, where those immediate financial needs are preventing them from thinking that maybe there's another way that they could be using their equity compensation plans. And then we have some who are not confident that the financial wellness program will meet their needs or they don't think it will provide advice that they need for their specific situation. So lots of room to communicate more around these benefits.

When we ask employees to tell us about the communications that they're currently receiving from their employers and how helpful they are, they are telling us they find employer communications helpful around their 401(k), transportation benefits, health insurance, and workplace financial wellness. Toward the bottom of that list, you see the bottom row to the right there, just about half say that they're getting helpful communications around their stock purchase plans and equity compensation.

CRISPIN: Yeah, and I just want to voice, again, the importance here to everyone on the line, you know, all the issuers out there, make sure you are leveraging and maximizing all that your provider has to offer from an education and communication standpoint. I mean, it's so important to have that dialogue. Strategize on those needs. Use this data to really empower the action items that you want to move forward to really deliver more of that kind of valuable advice and education. So, really, have that conversation with the provider and understand all those tools that could be available to help.

LILAH: Great. So we're going to wrap up here with key takeaways on what this means for us. These are all themes that came through our study insights. They're around diversification, educating employees around equity compensation, and financial wellness programs.

So when we look at diversification and we saw how potentially over weighted some employees are, on average, in their equity compensation, how can you help them look at the weighting of their company stock relative to their investment portfolio? When employers offer equity compensation it's vital that their employees are given access to financial advice and guidance, and to prevent that over reliance on any one stock.

And then the second theme that really came through is around equity compensation education. We saw relatively high confidence around making decisions, but relatively low knowledge in terms of how their different plans fit in with their overall financial picture. We know that equity compensation plays a key role in talent attraction, retention, and motivation, but not all employees are educated about their equity holdings. And when employers drive awareness of their awards program and how it works, employees often feel more engaged and committed in their employers success. So very important to communicate about the program and what it does for employees.

And then, finally, around financial wellness we saw from the study here that financial wellness programs, when the benefits are used they are found to be very helpful, particularly around planning for retirement and using equity compensation to reach goals and in managing debt.

So, with that, I'm going to turn it over to Crispin and for Q&A.

CRISPIN: Yeah, Lilah, just to add to that last comment, it's always important to look for opportunities for engagement, right, with your employees. You know, what are going to be those critical events that really spark their interest, whether it's a big annual maybe RSU lapse event, a big open window for exercising, ESPP purchases, tax season, etc.? But also look at recent events. Look at the market this week and the 800-point sell off we had yesterday. When the markets are doing well people tend to put some of their investment strategies on auto-pilot, but when you have an event like yesterday, it really can help wake people up and make them think about some of these key principles, think about the importance of diversification. So those are all things to consider, you know, to capitalize on when you're looking for opportunities to engage with your employees.

So, with that, before we head into the Q&A session, I want to reiterate that this is an annual study conducted by Schwab, so your input will be extremely valuable as we strive to provide actionable results for issuers. After Q&A, we'll provide our contact information. So please use that, or the survey, to give us feedback and recommend ways in which we could make this research even more impactful and useful for all equity compensation professionals.

So, now, let's get to the exciting part, the Q&A. If you have a question, again, please submit it by entering text on the right side of the webcast console in the Q&A panel console, and we'll do our best to answer all of them before the top of the hour.

So, with that, let's go ahead and start looking at our inbox. We have a question here, basically asking more about some of the research that we mentioned at the beginning. This one is specific to the Boomer population, and it asks, 'Does this mean that Boomers place more emphasis on 401(k) plans?' Lilah, what do you think about that?

LILAH: That's a really interesting question, and kind of taking a step back and thinking about the data that we saw on how weighted different generations are in their company's stock, and the differences there, what I would say is… you know, there's certainly a few hypotheses I have around that. So one would be that Millennials are over-weighted because they have smaller portfolios, so the company stock is more likely to make up a higher percentage of it. And then they may be over-weighted or may be more engaged with their equity compensation plans because it's more a part of how they began their careers, and they're more likely to be offered equity compensation plans, compared to Boomers. It's a bit hard to say from the data we have, here, that they're more engaged with their 401(k)s, but certainly, you know, we could hypothesize that they are placing more emphasis on their 401(k), perhaps, just given their age. But, you know, it's a bit hard to say from the data that we have here.

CRISPIN: Yeah. Yeah, that makes good sense. And I'll tell you, just from real life experience, when we're out meeting with companies that are more in the, you know, earlier stages of their development, and especially pre-IPO tech companies, really young workforces, it's hard to get a lot of excitement or attention on the 401(k) investment, you know, needs and priorities from that audience, generally speaking, versus maybe more traditional companies. So I think that's just another aspect we all have to realize and help address.

But thank you for that answer.

So moving on, here's a good question. You know, 'What was age or generational makeup of the people in the survey, itself?'

LILAH: Yeah. Great question, again. We had, really, an even mix. I mean, that was be design, we wanted to get feedback across the generations, and so, it is about a third, a third, a third. So, we have about a third Millennials, a little bit more Gen X, and a little bit less, Boomers, you know, just where they are in their job lifecycle.

CRISPIN: Oh, great. Great. And then, kind of a related question, did you see, you know, any generational differences there? I know we touched on some of that before, but maybe we should just go into a little more detail.

LILAH: Yeah, absolutely. So we did touch on some of the things, but we really saw some interesting things around benefits for different generations, which tend to be consistent with other research. We tend to see that Millennials work at companies that offer a wider range of benefits and they tend to be using more of those benefits. So, if you recall, we had laid out sort of a top tier, middle tier, and lower tier benefits, and we had questions around what's offered, what's used, and how important they are. And, generally, for Millennials, we see that they're more likely to be working for companies that are offering more, they're using more of them, and they're more engaged with all of those benefits. It's kind of interesting, because in other research that we do, we also see, just generally higher engagement from Millennials across workplace-type benefits and workplace-type issues and situations, so I found that to be really interesting.

And they're also more likely to find it to be important that employers provide help with different financial wellness programs. They're more likely to say that that kind of help is essential. So they are more likely to find it to be important or essential that employers offer help with equity compensation and how it can help them reach their goals, how to balance their equity compensation in their portfolios. And they also tell us that they're more knowledgeable about different types of equity compensation programs, and that they're… like we saw, that they're definitely more likely to take a job because of the equity plan.

CRISPIN: Excellent. And speaking of just overall compensation, were these higher-level-income Americans that were conducted in the study?

LILAH: They tended to be a bit more affluent in terms of income and a bit in terms of investments. You know, we look at our general US population, the median is more around 60,000, and here we saw that, on average, employees in this study are making closer to a 150,000, but we have, absolutely, a big range. So a third of our employees in this study were making less than 100,000. So we really feel like we have a good mix in terms of income level of employees in this study.

CRISPIN: Yeah, and just to confirm, another question came in. Was this strictly across the United States or was this also including some participants from abroad?

LILAH: This was totally based in the US.

CRISPIN: Got it. Got it. And a related question that just came in, at what kind of companies did these employees work for?

LILAH: Yeah, we have just a big range of industries represented. So we have healthcare, manufacturing, technology, retail, financial services, and many others. So not particularly concentrated in one industry over another.

CRISPIN: Excellent. Good to have that diversification in the study, itself.

Okay. We got another question here. Do we have any insight into the breakdown? 'What percent of total compensation, the equity compensation, represents of the surveyed participants? For example, how many of the respondents has their equity comp represent the majority of their total comp?'

LILAH: I am processing that question to see if I can answer it. Yeah, so... how many of the respondents does their equity compensation represent the majority of their total compensation? You know, I don't have that number off the top of my head or at hand here, but that's definitely something we can look into. So, on average, it's just about 30% of their investment portfolio and 30% of their net worth. But in terms of what percentage of participants in this study is it a majority of, that's something that we can dig into.

CRISPIN: Yeah. Yeah, and I also want to point out that I think that was for the average. But for the Millennial segment of the survey group, it made it up closer to 50%, if I recall, from the data that we looked at earlier today. So it definitely skews a bit higher, you know, for that segment of the demographics involved.

LILAH: Yeah, absolutely. That's for sure.

CRISPIN: Well, the Q&A line is still open, so, we're happy to answer additional questions, and want to encourage you, again, just to click on that Q&A button on your console. It's very simple to type a question and submit it, and we'll be happy to answer it as it comes in.

And while we're possibly waiting for some others, Lilah, any other, just general thoughts, comments, or even suggestions to the audience when you think about, you know, feedback that would be helpful to us to make some changes or tailor the next annual survey?

LILAH: Yeah. I'm so glad you raised that idea. So we would absolutely love to hear from as many of you as possible, in terms of what are the issues that you want to know about from participants? What are the perceptions, or attitudes, behaviors that you would like to know more about? And we would love to be able to integrate that into the next round of our survey.

CRISPIN: Excellent. Excellent. And, again, that survey is going to be available to everyone joining today shortly, so please be sure to engage on that.

So I think that wraps up the Q&A session. And so we have a couple closing comments here. Lilah, if you just want to advance the slide.

LILAH: Sure thing.

CRISPIN: So, basically, I just want to make sure everyone sees the contact information that we have here. So this does conclude our webcast for today, and, again, a huge amount of appreciation to everyone for taking the time to join us. I invite you to contact us here at Schwab if you have any questions or just want to provide some feedback. So, again, this is Crispin Hanshaw and my direct line is shown here onscreen, as well as an email address you can use to send in your feedback, or any information requests.

As a reminder, if you are a current Schwab stock plan client, just reach out to your client service team and they will be happy to provide any needed information.

And don't forget, one last time, you will receive a short survey before you exit this webcast. If you could fill that out, we would greatly appreciate it. Again, it's an annual study and we really use that feedback to help craft, you know, what the upcoming questions and the approach will be. So, as Lila just mentioned, we really want that feedback.

So, again, with that, that concludes today's webcast. Thank you all for joining in and we hope to hear from you soon either though phone, through email, or through your survey results. And, Lilah, again, a huge amount for all of your work on this. It's providing some tremendous insight that is very actionable and very helpful for all of us, here in the field of equity compensation, so, thank you.

LILAH: Thank you, Crispin, and the Schwab team, and for everyone joining the call today.