Equity compensation attracts talent according to Morgan Stanley Report
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.
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