Equity compensation attracts talent according to Morgan Stanley Report


Equity compensation attracts talent according to Morgan Stanley Report

By , February 22, 2022

According to the latest Morgan Stanley at Work’s 2022 State of Equity Plan Management Report, there is a strong trend towards companies re-imagining equity compensation to compete for talent.

Released in mid-February 2022, the report highlights the fact that equity compensation is only one piece of a much larger puzzle when it comes to being able to attract and retain key people, as employees are focused on a “whole or work experience.” The survey data covers both listed and private companies and despite the variations in size, industry and structure, the results were remarkably similar with a few key differences:

  • Private companies lag behind in offering equity to more employees just 35% of private companies provide an equity benefit.
  • Private companies are not as keen on expanding equity compensation  whilst 48% of public companies are expanding offerings to a wider range of employees only 35% of private companies are looking at this avenue.
  • 63% of private companies include a cliff for protection vs 83% of public companies.

In many ways thought the outcomes are very similar key findings, of the report are:

  • The primary purpose of employee ownership remains to attract and retain key talent  32% of HR decisions makers indicated their number one outcome was to attract and retain talent at the same time 47% reported their workforce attrition in 2021 was higher than 2020.
  • “Greatness” remains elusive only 38% indicated exceptional performance whilst 50% of equity leaders reported their plan is at least “good” at retaining talent.
  • Scale is critical after salary increases, expanding equity to a wider range of employees is the second most popular strategy to fight employee turnover.
  • Regular communication correlates with high engagement 48% of employers with highly engaged employees are communicating with participants weekly whilst at the other end employers with low to no engagement 70% are communicating annually (or not at all).
  • Plan design is evolving 32% of companies are providing shorter and more flexible vesting schedules to cater better to employee needs.

The report clearly shows that use of equity ownership is increasing, and the design and customisation of plan features to better attract, retain and motivate key people is also increasing.

Craig West

Craig West

Executive Chairman | Succession Plus

Craig West is a strategic accountant with over 20 years of experience advising business owners. His background as a CPA in public practice has provided invaluable experience in the key issues of concern to business owners.

In March 2014, Craig was appointed Executive Chairman of the SME Association of Australia, Australia’s largest small business organisation representing over 300,000 business owners.

In October 2014, he was awarded the Exit Planner of the Year at the Exit Planning Institute Annual Conference in Texas, USA, due to his innovative development of an exit planning process to help business owners maximise business value and achieve a successful exit.

Craig’s proprietary structure - a Peak Performance Trust - has won the Australia-wide award for the Employee Share Ownership Plan of the year twice in four years.

In November 2018, Craig launched SME Experts in partnership with Mark Bouris’ Mentored on Podcast One and quickly grew the monthly podcast audience to over 26,500 downloads; in October 2019, he released a new podcast focused on medium-sized businesses - Mid-Market Matters.

In July 2021, Craig joined the NSW Committee for STEP (Society of Trust & Estate Practitioners) – focusing on advising families across generations.

Craig has also launched a SaaS platform, Capitaliz (which captures the 21-step process), to assist other advisers internationally deliver advisory services at scale.

In November 2021, Craig was appointed Executive Chairman of NSW Leaders, a business mentoring group for leading NSW businesses.

In July 2022, Craig West received the award of Doctor of Business Administration for his research thesis titled “Examination of the key factors driving business exit options in Australian Small and Medium Enterprises.”

Craig is passionate about encouraging business owners to think strategically, maximise the value of their business and achieve a successful exit.

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