Almost a quarter (23.98%) of US employee stock plan participants who took part in a recent survey said they had sold company equity to cover the cost of day-to-day expenses.
Computershare questioned just under 1,000 client company stock plan participants during the past 12 months about their equity plans.
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Of the 34.79% who told the survey organizers they’d liquidated some or all of their shares, 13.47% of said they’d spent the money on rent, mortgage or bills, whilst 10.61% said they’d used the money to pay for medical services or healthcare.
Just under 10% (9.80%) of respondents said that they planned to use the money to pay down a line of credit or loan.
More than a tenth (11.48%) of those surveyed said that, except for access to their stock plans, they’d had no other way to access the short-term money they needed.
Almost a quarter (22.54%) of questioned sellers added that, without their plans, that they would have had to have raided savings, whilst 10% (11.07%) of respondents said they would have taken out a bank loan — and 9.43% said they would have resorted to using a credit card.
Just under 5% (4.10%) of respondents said they would otherwise have chosen to use a credit union and just under 2% (1.23%) of survey participants said they would have used a payday loan to access the needed funds.
Almost half (49.82%) of those questioned said that current economic conditions had played a role in their decision to sell and just under a third (30%) of respondents said they would have ideally waited more than five years before liquidating, according to the research. Just 13.82% of those surveyed said they sold because their company share price was high.
These data suggest that, for these and similar U.S. employee plan participants, stock plans are a way to build up short-to-medium term cash to deal with financial emergencies.
Employee stock plans can also prevent some employees from dipping into their 401ks.
Being able to ‘set and forget’ stock plan purchases, which take place automatically from payroll, can be vital for certain employees who may otherwise struggle to set aside a monthly savings amount for unexpected emergencies.
The vast majority (80%) of our client companies in the region also have employee stock plans that don’t specify a holding period, or provide discounts on purchases, which workers can also find attractive.
Survey participants highly valued stock plans: just under 60% (57.97%) of respondents said that they agreed or strongly agreed that taking part in their company’s employee equity plan provided them with a sense of financial security.
More than half (53.45%) of respondents also agreed or strongly agreed that they felt more engaged with their company as a result of holding shares.
Creating an employee stock plan enables companies to meet realistic short-to-medium financial needs of their workers in the current economy.
Industry research shows that just under half (49.0%) of S&P 500 companies and almost 40% (38.5%) of Russell 3000 companies offer a broad-based employee stock plan.
It’s important however that companies take actions that best benefit their own situations — by doing so they will also do the right thing by their employees.
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