Fidelity Survey Reveals the Top Four Ways Employees Use Proceeds From Company Stock Purchase Plans

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BOSTON — Are employees using the proceeds from the sale of company stock for luxury items and expensive vacations or for more practical purposes? A survey* from Fidelity Investments® looked at how employees spend the proceeds of company stock acquired through their Employee Stock Purchase Plan (ESPP), which provides rank-and-file employees the opportunity to apply part of their paycheck towards the purchase of company stock, which is often offered at a discounted price.

Here are the top ways people used the money from the sale of stock acquired through their company's ESPP:

  1. Help with debt. Over a third (34 percent) paid bills and addressed debt.
  2. Reinvestment and retirement. Almost a fifth (19 percent) of employees reinvested the proceeds from an ESPP sale –10 percent used the money to invest in stocks or mutual funds, and another 9 percent reinvested the proceeds in a retirement savings account.
  3. Home improvement and real estate. Nearly one in five (17 percent) employees are utilizing ESPP proceeds for home needs, with 10 percent using the money for home improvements and another 7 percent using ESPP funds for the purchase of a new or second home.
  4. Saving for a "rainy day." Eleven percent put the money in an emergency fund.

The research also showed workers may be overlooking one use for the proceeds from an ESPP – only five percent of employees used the money for college expenses or student loans.

"Employee stock purchase plans can help workers with their immediate needs and have a positive impact on their overall financial wellness," said Emily Cervino, vice president, Stock Plan Services at Fidelity Investments. "Along with giving employees access to company stock at a discount, an ESPP can serve as a great motivator by giving them ownership in the company."

ESPPs can also help employees protect their retirement savings by reducing the likelihood they will borrow against their 401(k). Fidelity research shows that employees in an ESPP are three times more likely to sell ESPP shares for emergency cash rather than take a loan from their 401(k), and over half (52 percent) added that it was "highly unlikely" they would tap their 401(k) if they needed cash.

"ESPPs are sometimes overlooked as a workplace benefit. In most cases, as many as two-thirds of eligible employees do not participate in their ESPP. These plans are easy to use and can help workers address a variety of planned – and unplanned – expenses," added Cervino. To learn more about ESPPs and company stock, Fidelity has posted information on LinkedIn that outlines what to consider when deciding whether to participate in an ESPP, as well as a podcast about the relationship between company perks and employee benefits.

About Fidelity Investments

Fidelity's mission is to inspire better futures and deliver better outcomes for the customers and businesses we serve. With assets under administration of $5.5 trillion, including managed assets of $2.1 trillion as of October 31, 2016, we focus on meeting the unique needs of a diverse set of customers: helping more than 25 million people invest their own life savings, nearly 20,000 businesses manage employee benefit programs, as well as providing nearly 10,000 advisory firms with investment and technology solutions to invest their own clients' money. Privately held for 70 years, Fidelity employs 45,000 associates who are focused on the long-term success of our customers. For more information about Fidelity Investments. For more information about Fidelity Investments, visit https://www.fidelity.com/about.

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* Survey conducted for Fidelity by CMI of 2,114 stock plan participants, both US (total: 1,369) and international (total: 745). CMI sent invitations and up to two reminders between March 14 and April 13, 2016. Surveys were collected through April 22, 2016.
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