A comprehensive program that includes both human guidance and online resources can help employees better understand their equity awards and view them in the context of their overall financial life. (UBS)

Education, communication and personalized guidance can increase perceived value of equity awards
Education on how to manage equity awards, clear communication on key dates and personalized financial guidance can greatly increase how much an employee values their equity compensation. However, many employers overestimate how satisfied employees are with the education and communication they currently receive.

Additionally, most plan participants don’t have, or are not aware of the access they have, to personalized financial guidance. Including equity compensation in a financial plan is also highly beneficial—yet only half of plan participants currently do so.

No alignment on preferred compensation mix

Employers and plan participants are not always aligned on overall compensation preferences. Most plan participants want cash as their overall compensation while employers assume most want a mix of cash and stock. Plan participants are most likely to use money from selling equity awards to pay off debt or make a large purchase.

The “sophisticated investor” effect
“Sophisticated” plan participant investors (who have $1M or more in investable assets) typically take a different approach. They are more likely to want a higher proportion of stock in their compensation, and when they sell their awards, they are more likely to re-invest the money instead of spending it.

Attracting new employees
In today’s tight job market, equity awards play a major role when attracting new talent. Yet, workplace flexibility trumps everything else. In fact, 85% of employees are willing to forgo equity awards in exchange for flexibility.

More accountability is needed when promoting Diversity, Equity & Inclusion (DE&I) efforts

Plan participants value Diversity, Equity & Inclusion (DE&I) efforts and want leadership to be held accountable for adoption across the firm. Seven in 10 agree that senior leadership performance and awards should be tied to DE&I efforts.

Actionable takeaways

Education, communication and personalized guidance are critical. The UBS Equity Award Value Index, which measures how much equity plan participants value their awards, continues to be positively influenced by education, communication and personalized guidance. The more satisfied participants are with these three elements, the higher their index score. If you don't do this already, consider offering your employees financial wellness as a workplace benefit. A comprehensive program that includes both human guidance and online resources can help employees better understand their equity awards and view them in the context of their overall financial life.

Communicate, communicate, communicate.Employees not only rely mainly on educational resources provided by their employers on how to manage equity awards, but they also expect these resources to be available. Unfortunately, employers highly overestimate the level of employee awareness with these resources. Ensure all employees receive timely communications and updates regularly throughout the year, not only when they need to take action.

One size does not fit all. Since everyone s financial journey is unique, it's fitting that the most valuable resource for employees is having access to personalized financial guidance. If you don't offer this already, consider adding human guidance to your suite of educational resources. A financial coach can educate the employee on their specific financial needs, allowing them to better value what you give them.

Equity awards can help attract talent. Two-thirds of employees say equity awards are highly important when considering a new job. If overall compensation for an open role includes equity awards, consider including that in the job description. Equity awards can be a tool to help you attract talent.

Publicize DE&I efforts. A company s DE&I efforts are highly important to employees, especially to the younger generations who make up the majority of the workforce today. They also think senior leadership performance and rewards should be tied to DE&I efforts. If not doing this already, consider tying a portion of executive compensation to company s DE&I efforts and ensure your employees are aware of it.

For more insights on sharing the value of equity awards programs, visit the Workplace Voice website and read the full report Taking the lead: Actions employers can take to boost the value of equity awards during times of volatility 10 November 2022.

Approval: 9/26/2022 Expiration: 9/30/2023 Review Code: RC2953 2022-875529