Fidelity® Survey Finds More Employers Boosting Discounts in Employee Stock Purchase Plans

As Economy Recovers, Employers Enhancing Plans to Attract and Retain Talent, Strengthen Company Benefits Program

BOSTON – Fidelity Investments® today released the results of a survey1 that reflects how improving economic conditions and a strengthening job market are prompting many U.S. companies to enhance their employee stock purchase plans in an effort to improve their benefits package. More than half of the companies surveyed (51 percent) indicated they intend to modify their employee stock purchase plan at some point in the next two to three years, with nearly one third (31 percent) of employers either introducing or increasing the employee discount on company stock – usually between 10 and 15 percent – or adding a “look back” provision2 to help employees buy shares in their company at a lower purchase price.

These intended changes are in sharp contrast to some of the downgrades many plan sponsors made to their employee stock purchase plans over the last few years. According to the study, 71 percent of the employers that made a change to their employee stock plan indicated their changes were a result of the recent economic downturn. Some of these changes included lowering or eliminating the employee discount on stock (14 percent), shortening the “look back” period (6 percent) or removing the look back provision altogether (5 percent).

“During the recent recession, some employers felt the need to reduce or eliminate the discount in their employee stock purchase program - just as many employers felt the need to reduce or eliminate their 401(k) match,” said Kevin Barry, executive vice president, Stock Plan Services at Fidelity Investments. “But as the economy continues to improve, companies are reinstating their discount as they realize that an attractive employee stock purchase plan can be a significant asset in attracting and retaining the most talented employees – especially in competitive hiring markets like technology, professional services and transportation.”

Employers View Stock Plans as a Top Company Benefit, Retirement Savings Vehicle
The survey found that 50 percent of employers consider their employee stock purchase plan part of the company’s benefits package, as opposed to a form of compensation or other benefit. Nearly three quarters (72 percent) of employers consider the employee stock purchase plan to be as valuable as pensions and dental benefits and more valuable than company-provided life insurance. And more than a quarter (28 percent) felt their employees value the company’s plan more than other company benefits.

When asked what results they hoped to see from changes to their plan, 41 percent of employers surveyed responded they were strengthening their plan to attract talent in an increasingly competitive hiring market. One third of employers (33 percent) indicated they hoped the enhanced plan would help retain valued employees, and almost half (45 percent) felt improvements to the employee stock purchase plan would motivate their workforce and improve morale.

In addition, employers now realize that employee stock purchase plans can play a key role in their employees’ overall savings efforts. A 2012 survey by Fidelity3 found that the majority of company stock plan assets (57 percent) are being earmarked for eventual investment or retirement savings after participants sell them, and more than eight out of ten employers (82 percent) felt their plan was an effective tool to help their employees reach their financial goals. When asked what they think are the most common ways in which employees use the proceeds from their stock plan, 69 percent of employers said retirement savings, along with college savings (42 percent), emergency savings (41 percent) and to reduce debt (33 percent).

Fidelity is a leading provider of stock plan administration services in the United States. It services 250 employers nationwide, representing $125 billion in grant value.

About Fidelity Investments
Fidelity Investments is one of the world’s largest providers of financial services, with assets under administration of $4.0 trillion, including managed assets of $1.7 trillion, as of February 28, 2013. Founded in 1946, the firm is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing and many other financial products and services to more than 20 million individuals and institutions, as well as through 5,000 financial intermediary firms. For more information about Fidelity Investments, visit www.fidelity.com.

1) Study conducted by Richard Day Research/Market Probe of Chicago online between December 18 and 28, 2012.
Respondents were decision makers regarding the administration of at least one of these plan types: restricted stock, stock option plans and employee stock purchase plans.

2) A “look back” provision usually compares the share price at the beginning and end of the purchase period and uses the lower to calculate purchase price, although this formula may differ for plans that have multiple purchase periods in the offering period.

3) Study conducted by Richard Day Research/Market Probe of Chicago online between Jan. 31 and Feb. 21, 2012. Participants were from three plan types: restricted stock, stock option plans and employee stock purchase plans.

Stock plan recordkeeping and administrative services are provided by Fidelity Stock Plan Services, LLC.

Fidelity Brokerage Services LLC, Member NYSE, SIPC
900 Salem Street, Smithfield, RI 02917

Fidelity Investments Institutional Services Company, Inc.
500 Salem St., Smithfield, RI 02917



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