In general, ownership incentives such as stock options, restricted stock, performance shares, and ESPPs do help to motivate, retain, and recruit employees. The surveys and academic studies summarized below support this view. (For additional studies that look at how employees value their grants, see a related FAQ.)

Fidelity Stock Plan Services

Research by Fidelity published in 2021 (Unlocking Success—For You And Your Employees) found that employees who include equity compensation in their financial planning are "nearly three times as likely to feel loyal to their employer" than those who do not. Its survey of stock plan participants revealed:

  • 51% feel more loyal to their company as a result of equity grants
  • 42% said they work harder because of stock compensation, "knowing that the stock plan will reward in line with company's performance"
  • 61% reported that equity comp gives them a sense of employee ownership in the company
  • 53% said that an important factor in taking a different job at another company would be the presence of a similar stock plan

In 2018, Fidelity conducted a survey of stock plan participant attitudes and knowledge in which, interestingly, the results are broken down by gender (see the related press release and fact sheet). For example:

  • 49% of women (45% of men) indicate that a company stock plan is an important benefit in a new job, while 40% of women (31% of men) agree that giving up stock plan benefits would make it difficult to switch jobs.
  • 52% of women (49% of men) say that a company stock plan increases loyalty to their employer.
  • 64% of women and men get a sense of ownership from the stock plan.
  • 67% of women (64% of men) indicate they are very satisfied with their company's stock plan.
  • 48% (46% of men) of women say they work harder knowing that the company stock plan rewards them for their company’s performance.
  • 48% of women (66% of men) say they understand very well their stock plan, and 32% of women (47% of men) are confident they know very well the tax implications of selling shares.

Charles Schwab Stock Plan Survey

In 2019, Schwab Stock Plan Services conducted a national survey of 1,000 stock plan participants.

  • The survey revealed that 87% of the responding employees say that a stock compensation program would attract them to work for an established public company.
  • Just over half (51%) of the respondents who indicated that equity compensation is important to them say it's because stock grants allows them to participate in the growth of their company.
  • A significant portion (41%) reported that they would not consider leaving their current company, or would delay leaving, until after the next vesting of their equity grants.

These survey results suggest that equity compensation continues to be an important part of attracting and retaining employees–especially younger employees. Nearly half (46%) of the Millennial employees said stock compensation was a major factor in their decision to accept their current job. For more data from the 2019 Schwab survey and its 2020 followup, see another FAQ.

The 2018 national survey by Schwab Stock Plan Services discovered that about 40% of the respondents say equity compensation helps to keep them at their company in some way, a great example of stock compensation's value for employee retention and loyalty-building. The survey revealed that 76% of the participants consider equity compensation to be part of their long-term financial plans and makes them feel less financially stressed. It also found that 63% of them feel more prepared for retirement because of their grants.

In a similar Schwab survey, also in 2018, plan participants reported that the specific financial reasons below are the most motivating.

Reason why equity compensation is motivating

Percentage of participants

Allows me to participate in the growth of the company I work at

45%

It will help me significantly build/increase my wealth

44%

It means the success of the company will play an important part in my own success

42%

It will help me retire earlier

42%

Gives me more control over my finances

42%

Provides me with financial freedom I wouldn't have otherwise

41%

It helps alleviate my financial stress/some of my financial stress

38%

Helps me learn more about investing

26%

E*TRADE Survey

In 2019, E*TRADE surveyed stock plan participants at its client companies. Among Millennials and GenZ, more than half (57%) said stock plan benefits are an important consideration when considering a new job. Some other notable findings:

Survey question All participants Under 35 Age 35–44 Age 45–54 Age 55+
I have a good idea how much my stock plan benefits are worth 74% 70% 74% 76% 76%
I closely follow my company's stock price 67% 66% 67% 67% 65%
I could explain how my stock plan works to a colleague or friend 62% 63% 63% 63% 61%
My stock plan provides me with a sense of ownership in the company 59% 53% 58% 63% 61%
Stock plan benefits are an important consideration for me in changing jobs 54% 57% 58% 57% 46%
My contributions to my company's performance are acknowledged through the equity grants I receive 46% 44% 48% 49% 44%
I include the value of my stock plan when calculating my total compensation 45% 41% 25% 48% 44%

Morgan Stanley's Survey Of Stock Plan Participants

A Morgan Stanley survey of employees with equity awards found that 59% of the respondents regard their grants as a major part of their compensation. Even more (82%) think that operating a stock plan is a smart business move for their company. Most of the survey respondents (92%) expressed satisfaction with their companies' stock plans, and 65% praised their stock plans as "extremely or very valuable" employee benefits.

The UBS Equity Award Value Index

A UBS survey (UBS Participant Voice: The UBS Equity Award Value Index) presented a number of interesting findings which show that the more experience employees have with equity awards, the more they value them and are motivated by them. For example, while the survey found that at least some employees at every level of vesting experience perceive equity compensation as "a way to build wealth," more than half (55%) of the respondents with six or more vesting experiences felt this way. Those with a greater amount of equity compensation experience were more likely to see equity compensation as an important motivation for taking a particular job (19% for those with the fewest vestings versus 48% for those with the most), for staying at a job (29% for those with the fewest vestings versus 51% for those with the most), and in accumulating wealth (20% for those with the fewest vesting versus 51% for those with the most).

Evidence In Academic Studies

Academic studies have found that companies with broader grant programs have higher operating performance (see, for example, Incentives, Targeting and Firm Performance: An Analysis of Non-Executive Stock Options, Yael V. Hochberg and Laura Anne Lindsey, Review of Financial Studies). The researchers found that the link between the incentive value of stock options and its effect on performance is concentrated in companies with high growth opportunities and in companies with a relatively small number of employees (reducing what the authors call the "free riding" problem). In academic parlance, the researchers concluded that the superior performance of companies with broad stock plans is "consistent with theories of cooperation and mutual monitoring among co-workers."

According to another study, the incentives and performance-driving value of stock options work only if employees get a payoff from the grants. This is the finding of Peter Cappelli and Martin Conyon of the Wharton School at the University of Pennsylvania (see Stock Option Exercise And Gift Exchange Relationships: Evidence For A Large US Company, published by the National Bureau of Economic Research). The researchers examined the motivational role of stock options and found that an option grant itself does not, on its own, create an incentive. It is only realized financial gain that makes employees perform better and feel an obligation to work harder.