Employee Stock Purchase Plans (ESPPs) typically provide an opportunity for employees to periodically purchase discounted company shares using payroll deductions. As such, ESPPs represent an easy and effective way of generating more employee owners in the company, essentially aligning more of the population with shareholders. And, unlike full-value shares or stock options that tend to be targeted to individuals responsible for more immediately impacting a firm’s stock price performance and often come with a significant expense, ESPPs are relatively inexpensive and intended to be available to a broader employee population.
Given these benefits, it is no surprise that ESPPs are a common discussion point with companies analyzing ways to benefit both employees and the business. It turns out that despite how well-known ESPPs are, there is a lack of reliable data as to how prevalent they are offered among companies in the United States (U.S.). Given this lack of data, some companies are unsure if their competitors are offering one and if it’s a good idea for them to. To find the answer, we gathered data on ESPP offerings covering the S&P 500 and the Russell 3000 as well as contributions from the National Association of Stock Plan Professionals (NASPP) and Fidelity Stock Plan Services.
We chose to analyze the S&P 500 and the Russell 3000 to specifically cover two iterations of the U.S. market, both high-profile, large cap companies and a broader representation that can serve as a proxy for the U.S. market. We did not analyze private companies as the data is not public and, from our experience, it is uncommon for private companies to maintain ESPPs. Our data was gathered through November 30, 2019, representing active plans in 2019.
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