Test Your Knowledge After reading this article, test your knowledge with a fun, interactive quiz on the basics of stock grants

It is hard to find comparative data on stock options, restricted stock/RSUs, and performance shares. Fortunately, the 2019 Domestic Stock Plan Design Survey by the National Association of Stock Plan Professionals (NASPP), along with earlier annual surveys, offers data letting you compare the terms of your equity awards to those of grants at other companies. Of course, you need to be familiar with the specifics of your company's plan, as those are the rules that apply to you.

Types Of Stock Compensation

  • Restricted stock units (RSUs) are now the most common equity currency among companies in the United States. The NASPP's 2019 survey revealed that 89% of the responding companies award RSUs, while only 51% grant straightforward restricted stock.
  • Stock options remain popular: 76% of the surveyed companies grant nonqualified stock options (NQSOs), and 38% of the companies grant incentive stock options (ISOs).
  • Grants with performance-based features (e.g. performance shares) occur at 93% of the companies surveyed by the NASPP in 2019, up from 87% in 2013 and from just 71% in the 2010 survey. However, the survey results show that performance-based awards are much more common for executives than for middle managers and rank-and-file employees.


According to the NASPP's 2019 survey, the higher your employment rank in a company is, the more likely you are to receive an equity award. The table below shows the surveyed companies' eligibility practices at various levels in the corporate hierarchy (it gives the percentage of companies that make each type of grant available to the specified group).

Corporate level Stock options or SARs Restricted stock/RSUs Performance-based awards
CEO, CFO, and named executive 51% 81% 84%
Other senior management 47% 87% 69%
Middle management 25% 81% 23%
Other exempt employees 14% 53% 9%
Nonexempt employees 6% 19% 3%

Reasons For Making Grants

The NASPP's 2016 survey gave the following as the most commonly reported corporate reasons for granting stock options and restricted stock/RSUs.

Reason for making grants to employees or executives For stock options (% of companies) For restricted stock/RSUs (% of companies)
Align with shareholder interests 79% 82%
Retention 68% 89%
Incentive/reward 75% 81%
Remaining competitive with industry peers 69% 78%
Fostering a culture of employee ownership 34% 40%
Reward for meeting specific performance targets 22% 47%
Normal practice at hiring 19% 30%

Restricted Stock & RSUs: Vesting And Withholding

The NASPP's 2019 survey found that 73% of the responding companies use graded vesting schedules (shares vest in increments over time), and 27% have cliff vesting (all shares vest after the vesting period). Within these groups:

  • At companies with graded vesting, 52% vest the grants over a total period of three years and 38% over a total period of four years.
  • For graded vesting schedules, 87% of the companies vest shares annually during the vesting period, while only 5% have quarterly vesting after a one-year cliff period.
  • At companies with cliff vesting, the most common vesting period is three years (82%).

Most of the surveyed companies use share withholding to collect the taxes owed when restricted stock/RSUs vest. The survey found that share surrender and cash payment (either by check or electronic transfer) are the most common methods that both employees and executives use to pay withholding taxes. The table below shows the percentage of surveyed companies that allow each given method, at both the executive and nonexecutive levels.

Method Executives Nonexecutives
Share withholding (surrender) 91% 87%
Cash (by payroll withholding) 27% 28%
Cash (paid by check or electronic transfer) 56% 55%
Sale of shares to cover taxes 35% 39%

The survey also found that 38% of the responding companies offer a choice of two different means to pay the withholding, and 9% offer more than two ways. However, more than half of the companies (53%) do not let employees pick the withholding method. If an employee does not bother to choose, 85% of the companies use share surrender as the default method. A significant minority (21%) will issue IRS Form 1099-B to the employee for the shares withheld.

Stock Options: Term Length, Vesting, Exercise Price

The NASPP's 2019 survey found that ten-year stock option terms, i.e. the time you have between the time of grant and the expiration of the grant, are still most common (at 82% of the companies), though a significant minority of the surveyed companies (12%) grant options with seven-year terms.

Graded vesting of options at regular intervals is much more common than cliff vesting (i.e. the some or all the options in the grant become exercisable at the same time). For option vesting, the 2019 survey found the following among the responding companies:

  • 93% use a graded vesting schedule and 7% offer cliff vesting.
  • Among option-granting companies with graded vesting schedules, 46% offer complete vesting after three years, 45% vest all of the options after four years, and 8% vest the options over five years.

In most cases, your exercise price for stock options is the fair market value (FMV) of the company's stock at the time of the grant (see a related FAQ on the process of granting equity awards). The NASPP's 2019 survey found most companies set FMV solely by the closing stock price on the date of grant.

Determinant of exercise price % of companies/th>
Grant date closing price 81%
Grant date high/low average price 10%
Previous day's closing price 5%
Previous day's high/low average price 2%

Communication Needs Improvement

According to the NASPP's 2014 survey, companies are doing more to communicate with grant recipients than they used to, though some employees continue to let in-the-money stock options expire, wasting the corporate value of the equity compensation. Among the companies that have stock plan communications:

  • 80% of the responding companies provide employees with informational materials on stock grants when the grants are made, 21% do so regularly (e.g. yearly), and 22% do so immediately at hiring. Nearly all of the companies (96%) email this information to employees or provide links to online materials, though a significant minority of the companies (39%) also still distribute these materials in printed form.
  • 91% of the surveyed companies distribute plan documents (excluding grant agreements) by an online route, whether the internet, a corporate intranet, or the website of a third-party stock plan administrator. Most (78%) also deliver the plan prospectus in these ways, and about 70% provide FAQs, descriptive documents, or other educational materials through online portals.
  • 34% of the companies directly notify optionholders of upcoming expiration dates, while an additional 47% delegate this type of notification to a third party (such as the brokerage firm or transfer agent that handles exercises). However, 18% of the surveyed companies do not notify optionholders at all about upcoming expiration dates. A third of the companies do not notify grant recipients of upcoming vesting dates.

Next Article

Part 2 of this series digs deeper into the NASPP survey data, covering such topics as grant guidelines, expiration provisions, and what happens to options at job termination or in a merger involving the company.

Editor's Note: The NASPP is the organization that professionals rely on to keep up with practices and developments that affect equity compensation. For more information and a wealth of resources, see www.naspp.com.

Kate Victory is a former content developer and editor at myStockOptions.com. This article continues to be regularly updated by the website's editorial staff.