PLANSPONSOR - December 2021 - January 2022 - 12

UPFRONT
Equity
Benefits Can
Help Workers
Meet Goals
THE PANDEMIC has changed how
employees and employers alike view their
workplace financial benefits, according
to findings from Morgan Stanley at
Work's inaugural " State of the Workplace
Financial Benefits Study. " One such
change is they increasingly focus on offerings
such as equity compensation.
Equity compensation in the workplace
serves as an essential benefit to not
only help employees meet their long-term
financial goals, but also to increase their
motivation and loyalty, the company says.
According to the study, employees
diverge over what makes equity compensation
a strong motivator, with the top
three reasons they selected being " gives
me a stake in the success of the company "
(27%), " helps meet long-term goals "
(26%) and " provides an additional source
of income " (23%).
Equity compensation programs are,
more and more, being considered part
of participants' overall financial strategy,
TIDBITS
Labor-Pool Drought to Continue
In a survey by Principal
Financial Group, onethird
of workers said
they may change jobs
or retire in 2022. In
addition, Willis Towers
Watson, surveying
160 human resource
leaders, found that ...
77% 2% 19%
report having
trouble finding
and retaining
employees
say they have
no trouble finding
and retaining
employees
say they are not
struggling now
but may do so in
the future
12 PLANSPONSOR.COM December 2021 - January 2022
according to 2018 research from Fidelity
Investments. One-quarter of the 1,448
company-stock-plan participants surveyed
indicated they would tap their retirement
account if they needed cash-the same
percentage as in Fidelity's 2016 survey;
however, 62% said they would sell their
company stock if they needed cash-an
increase from 58% in 2016.
The 2018 survey found that when
participants did sell their company stock,
28% used the proceeds to pay bills or pay
down debt. Thirteen percent reinvested
the proceeds in stocks or mutual funds,
and 9% reinvested them in a retirement
savings account. Nine percent each also
reported that they used proceeds as emergency
savings and for college expenses or
student loan payments.
Retirement savings is, by far, the
most common goal for those building
equity compensation wealth, according to
Schwab Stock Plan Services. Amy Reback,
vice president of that Schwab division,
says having a diversified portfolio of both
taxed and tax-deferred savings is a good
strategy: " People who enter retirement
with the appropriate amount of taxed and
tax-deferred savings are more likely to
have an enjoyable retirement, " she says.
" If you have only tax-deferred savings, you
are still taxed when you draw down those
assets, and you could have a pretty large
tax bill. It could be as much as 20% or
25% of your assets. "
Equity compensation plans are not
just for executives-employers can make
them available to rank-and-file employees,
as well. However, lower-income employees
may feel they cannot afford to participate
in them.
Aaron Shapiro, founder of Carver
Edison, says, on average, only 30% of
workers are able to participate and very
few of them max out contributions.
Carver Edison offers a program called
Cashless Participation, an enhancement
to employee stock purchase plans (ESPPs)
that allows employees to maximize their
ESPP contributions with limited payroll
deductions.
" Our study shows equity compensation
is a powerful motivator that can help
employees meet their financial goals,
while helping employers attract and retain
talent, " says Scott Whatley, managing
director and global head of equity solutions,
with Morgan Stanley at Work.
" As this benefit continues to be
sought after by employees at all levels, the
need to scale it becomes critical, " Whatley
says. " Further, for companies to optimize
this offering, they must be mindful of
comprehension gaps among employees
and provide them with meaningful
communication and educational tools to
maximize the advantages of their equity. "
-Rebecca Moore
http://www.PLANSPONSOR.COM
PLANSPONSOR - December 2021 - January 2022

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