Is equity compensation the new 'must-have' financial wellness benefit?

• Key Insight: Discover how equity compensation aligns employee wealth-building with company growth and retention.
• What's at Stake: Talent competitiveness and long-term retirement outcomes hinge on equity plan design and access.
• Supporting Data: Nearly 50% of employees call equity compensation a "must-have" for new jobs.
• Source: Bullets generated by AI with editorial review

Sometimes, the best way to invest in employees' career and development is to let them invest in you. 

Nearly half of employees consider equity compensation — a benefit that gives them a stake in their company's shares — a must-have benefit for a new job and view it as a critical tool to help achieve their retirement goals, according to a recent survey from financial services company Charles Schwab. Adding an effective equity compensation package may be the perfect solution for benefit leaders looking to attract, retain and engage their workforce.

"Employees want to participate in the growth of the firms that they're active in and employed at," says Andrew Salesky, the stock plan services managing director at Schwab. "Equity compensation benefits provide them with that opportunity." 

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Compensation benefits are hardly a new concept, but they have steadily gained traction over the years. Beyond boosting engagement, Schwab's survey highlighted several other factors that have made the benefit particularly appealing to employees. For example, 37% of employees said equity compensation could help them learn more about investing, 32% said they could alleviate financial stress and another 32% said they could boost employee morale. Most notably, nearly 40% of employees said equity compensation could help them build or increase their wealth. 

As a company's value increases, so does the value of employees' stock or options, allowing employees to build wealth beyond their regular paycheck. 

"Participants or employees that benefit from an equity program were found to be highly confident that they're going to meet their long-term financial objectives like retirement," Salesky says. "But these kinds of benefits can also support near term funding needs outside of retirement, whether that's for college education or buying a house."   

How to build a successful benefit package

There are a number of different ways for leaders to implement equity compensation benefits. The most common is stock options, which give employees the right to buy company stock at a set price in the future. Organizations can also offer restricted stock units (RSU), which grant shares once certain conditions like time or performance are met, and employee stock purchase plans (ESPP), which let employees buy shares at a discount through payroll deductions. Some companies will even offer performance shares or stock appreciation rights, which reward participating employees when company value rises. This not only helps retain current employees, according to Salesky, it's a competitive advantage when trying to recruit new employees, especially young talent looking for better financial stability. 

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"The first step of the process for leaders is to establish a plan design," Salesky says. "They'll have to decide what kind of options they want to feature — like stocks, RSUs, or ESPPs — as well as how broad across their employee base they want their coverage to extend to."  

Simply offering comprehensive coverage isn't enough, though. Salesky urges leaders to also make the navigation of those programs as simple as possible in order to see any progress from their workforce. 

"Having an equity program is a big benefit, but leaders also need to recognize that employees are going to need guidance and advice to actually leverage that equity program," Salesky says. "There is a lot of opportunity to make that support available they should take advantage of."