Financial Planning Adds Value to Employee Stock Awards

March 26, 2021

Among employers using company stock to attract and reward top talent, it's important to help employees make the most of stock awards by offering financial planning advice as well, new research shows.

Some workers aren't even accepting their awards, much less selling stock or exercising options when at appropriate times to do so, according to Fidelity Investments, which manages employee retirement plans and stock award programs.

Appreciating Stock Awards

Fidelity received responses last year from 440 employees at publicly traded companies who had received stock awards within the last two years, including
restricted stock units,
restricted stock awards, stock options or company shares given as performance awards.

The report,

Unlocking Success—For You and Your Employees
(link will download a PDF), found that employees who consider equity compensation in their financial planning were:

  • Twice as likely to take proactive steps to manage their stock awards, such as accepting awards, exercising options or selling shares.
  • Twice as likely to work harder, knowing that the value of their stock plan award may increase as their company's stock price increases.
  • Three times as likely to feel loyalty to their employer.
  • Three times as likely to include the monetary value of stock plan benefits when calculating compensation from their employer.

Among employees that consider equity compensation in financial planning:

  • 61 percent highly value their company's equity compensation plan.
  • 55 percent considered the monetary value of stock plan benefits when calculating compensation from their employer.

"Organizations continue to offer company stock awards as a way to attract and retain top talent, as well as to reward top performers," said Mark Haggerty, head of stock plan services at Fidelity Investments. "However, including company stock in financial planning is key to unlocking the real value of these awards—not only will employees have a greater appreciation of their company stock plan, but they will understand how company stock awards can contribute to their overall financial well-being."

'Owning It' at Ally

Ally, an online banking and financial services firm headquartered in Detroit with nearly 10,000 employees, found that stock awards, an employee stock purchase plan and a financial well-being program work together to ensure employees have a vested interest in the firm's success.

"In 2019, Ally introduced our first #OwnIt grant to make all employees shareholders, and we did it again in 2020," said Kathie Patterson, Ally's chief HR officer. The #OwnIt awards are one-time, discretionary grants of 100 shares of Ally restricted stock units.

Ally had a record year across many metrics in 2020, the firm reported, and wanted to reward "the exceptional efforts of our team members across the organization." For many employees, the #OwnIt grant awards "may also have been their first opportunity to participate in the stock market," the firm said. Offering equity grants "was a big step, but an important one that underscores Ally's focus on creating an inclusive culture where all active, regular employees have a vested interest in our success."

Patterson added, "It's about living our values, leading with heart and humanity, and inspiring an inclusive culture where everyone has a seat at the ownership table. The passion, protection and empowerment that come with an ownership mentality are not only good for business—they're transformational for employees."

Ally also has an employee stock purchase program that gives staff the option to purchase Ally common stock at a 15 percent discount twice a year. And the firm expanded its resources for employees by launching a Financial Learning Center, which includes a financial well-being assessment; a variety of calculators, tools, and resources; and free, unlimited access to certified financial planners.

While most companies offer some form of equity at a leadership—or even a senior leadership—level, "we felt that the passion, protection and empowerment that comes with a founder's mentality is something all employees can benefit from," according to a statement by the firm. "We want working at Ally to be more than just a job—it's about having a responsibility to drive the company forward and fostering a connection to our future success, which benefits us all—customers, shareholders and, importantly, one another."

Related SHRM Articles:

Stock Plans Increase Savings, Attract Millennials, Studies Show,
SHRM Online, October 2020

Equity Compensation Plans Build Loyalty but Uncertainty Abounds,
SHRM Online, February 2018