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Global employee stock purchase plan trends survey

Insights on the structure and management of stock purchase plans

Our inaugural survey of global employee stock purchase plan trends explores how companies are structuring and administering stock purchase plans. It also examines the challenges they face managing plan costs and tax compliance, and encouraging employee participation.

2018 global employee stock purchase plan trends survey

Unlike other equity incentive awards, employee stock purchase plans (ESPPs) are typically broadly offered to company employees as a means to attract and retain talent and foster a sense of shared ownership in the company. Our first annual Global employee stock purchase plan trends survey explores the popularity of ESPPs, how companies are structuring their plans, and the challenges they face in global administration, increasing employee participation, and the management of plan costs and tax compliance.

Exploring the numbers: General trends in employee stock purchase plans

ESPPs continue to be a featured component of employee total benefits
Nearly three-quarters of respondents said their company offers an ESPP to all employees or to employees in their headquarter country or other specific countries.

But only 28 percent of respondents noted that their companies have considered adopting a stock purchase plan globally. Do companies perceive challenges to implementation and administration?

The offering of employee stock purchase plans continues to be valued as a means of competitively attracting and retaining talent and fostering a sense of employee ownership in their companies. Nearly 69 percent of respondents identified both better aligning the interests of its employees with those of its shareholders and increasing its ability to attract, recruit, and retain talent as their primary reason for offering an ESPP.

Based on the majority of responses, qualified stock purchase plans are overwhelmingly favored by companies participating in this survey.

Qualified vs. non-qualified employee stock purchase plans

Some countries offer tax qualified designation for ESPPs, resulting in tax preferential and favorable treatment to participant employees and different employer reporting and withholding requirements. The criteria for obtaining tax qualified status vary among the jurisdictions where offered. This can present challenges for companies attempting to implement a global ESPP with tax qualification in multiple countries.

Examining the structure and features of ESPPs

Offering periods
Our survey found that ESPP offering periods of less than six months are the most popular at nearly 59 percent. Forty-plus percent of respondents report that their company employee stock purchase plan provides for a three-to-six-month offering period, while more than 18 percent noted a period of less than three months. A combined 41 percent noted an offering period from seven to over 25 months.Discount vs. matching

ESPPs featuring a share purchase discount are heavily favored over a share matching plan design—with nearly 74 percent of respondents noting their company plan operates under the former.

Share purchase discount rates

Of those offering plans under a discount design, roughly two thirds of respondents noted they offer a share purchase discount of 15 percent. Only 27 percent operate a discount under 15 percent and even less (six percent) offer a discount greater than 15 percent.

Features of ESPP share matching provisions

For companies offering a plan that features share matching, 44 percent of respondents noted that employees receive one matched share for every two or three shares they purchase. A combined 36 percent noted a required purchase of four or more shares to receive the one matched share.

Employee participation in ESPPs

Employee participation in ESPPs is low
Although the vast majority of respondents offer a stock purchase plan, 37 percent report a participation rate of less than 25 percent by their eligible employees. And nearly 32 percent report a participation rate between 25 and 50 percent.
What are the barriers to greater employee participation?

Nearly 54 percent of respondents consider the share purchase discount or matching share plan features as the factors most impactful to employee participation in ESPPs. Other factors may contribute to a lesser degree including:

  • Perceived value of company share ownership—19 percent
  • Effective communication explaining the plan and its benefits—16 percent
  • Plan features (e.g. offering period, holding period, lookback provision, etc.)—10 percent

A limitation on the amount of shares that an employee may purchase is reported as the least impactful factor (one percent).

ESPP considerations and challenges

The structuring of ESPPs
Respondents noted that achieving high levels of employee participation and balancing plan costs vs. benefits are primary considerations in the structuring of their company plans (both at 38 percent). Tax consideration and ease of administration and management have less impact in plan structuring.

Administration and management of ESPPs

Nearly 52 percent of respondents identified “effectively and consistently communicating plan details and benefits to employees” as their most significant challenge when it comes to the administration and management of the ESPP—which may provide at least a partial explanation for the low employee participation rates in these plans.

Top three challenges to ESPP administration and management:

  1. Effectively and consistently communicating plan details and benefits to employees—52 percent
  2. Managing plan costs and tax compliance—40 percent
  3. Understanding the local HR administration and compliance requirements in the country/countries where the plan is offered—38 percent

Getting past potential roadblocks to ESPP success

While a large majority of responding companies offer employee stock purchase plans, achieving high rates of participation by eligible employees remains a challenge. Barring increases to share purchase discount caps, more effective approaches to 1) communicating plan details and benefits, and 2) managing plan costs and tax compliance may prove to be key levers to increasing employee participation and delivering the rate of return often used internally to measure a plan’s success.

To learn more about the survey findings and the issues it addresses, please contact your Deloitte representative or email our Global Rewards team at

About the survey

• Conducted during December of 2018 and January of 2019
• 332 respondents employed by companies globally across various industries
• Company size of respondents ranges from under 10,000 to over 100,000 in worldwide employee headcount
• Functions/roles of respondents span accounting, finance, HR, legal, and tax
• Job titles of respondents include stock option/plan, payroll, benefits, compensation, or mobility

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