In Era of Benefit Cuts, Employee Equity Plans Likely to Survive - 19 Nov 2009

 In Era of Benefit Cuts, Employee Equity Plans Likely to Survive - 19 Nov 2009

http://www.earthtimes.org/articles/show/in-era-of-benefit-cuts-employee-equity-plans-likely-to-survive,1053911.shtml

In this economic climate, many employers
are reviewing employee benefits and cutting back on those programs that
are no longer considered impactful or cost effective. Given the
volatility in equity markets, changes in accounting rules and growing
cost constraints, will employee equity plans remain effective and
viable in the future? Or will they be one of the ‘legacy’ benefits on
the chopping block during this recession? These were key questions in a
survey report “Employee Equity Plans: Do They Have a Future?.”

London, UK (PRWEB) November 19, 2009 -- In
this economic climate, many employers are reviewing employee benefits
and cutting back on those programs that are no longer considered
impactful or cost effective. Given the volatility in equity markets,
changes in accounting rules and growing cost constraints, will employee
equity plans remain effective and viable in the future? Or will they be
one of the ‘legacy’ benefits on the chopping block during this
recession? These were key questions in a survey report “Employee Equity
Plans: Do They Have a Future?”

In this economic climate, many employers are
reviewing employee benefits and cutting back on those programs that are
no longer considered impactful or cost effective. Given the volatility
in equity markets, changes in accounting rules and growing cost
constraints, will employee equity plans remain effective and viable in
the future? Or will they be one of the ‘legacy' benefits on the
chopping block during this recession? These were key questions in a
survey report released today in London.

The survey report "Employee Equity Plans: Do They Have a Future?" is a collaboration among WorldatWork, Performance and Reward Centre (PARC) and Hewitt New Bridge Street.

A majority of respondent companies indicate they
have no plans to cut back on employee equity plans in the next 24
months. They still consider equity plans an integral part of a
company's total rewards strategy — a tool to help motivate and retain
employees. Indeed, more than 70% of companies that are able to operate
some type of employee equity plan choose to do so.

However, employees may need help seeing equity
plans as a value-added benefit: less than 10% of employers indicate
that a majority of eligible employees are participating in employee
stock purchase plans (ESPPs). In addition, at least 80% of respondents
indicate their options are underwater (i.e., the current share price is
lower than the option price), but more than 80% of that group has taken
no action to address the situation.

The study looked at the prevalence of three types
of employee share plans: options, free/restricted shares and ESPPs in
companies in the U.S., U.K. and Western Europe.

Key findings:

"All signs indicate that stock equity plans will
remain as an employee benefit especially at large companies," said Ryan
Johnson, CCP, vice president of research at WorldatWork. "To maximize
an equity plan's value, employees need help understanding the risks and
benefits. It is no longer enough for companies to offer equity; they
also need to give employees the know-how to empower them to make good
decisions."

"Our survey confirms the importance of equity
plans as an important part of the organization's total rewards
package," said Don Lindner, CCP, senior practice leader at WorldatWork.
"They are especially vital in terms of aligning employee interests and
goals with the company's."

About the survey:
WorldatWork, Performance and Reward Centre (PARC) and Hewitt New Bridge
Street collaborated on this survey, which was conducted in the second
quarter of 2009. A total of 843 respondent companies participated
across a broad array of industries. Nearly 75 percent of respondents
were headquartered in the U.S., 13 percent in the U.K. and the
remainder elsewhere (mostly Western Europe). About half of respondent
companies have 10,000 or more employees. Almost three-quarters had
annual revenues of more than $1 billion (USD). The research report
includes case studies from a number of prominent organizations
including GlaxoSmithKline, Standard Chartered Bank, Google and
Starbucks.

About the sponsors:
WorldatWork is a global human resources association focused on
compensation, benefits, work-life and integrated total rewards to
attract, motivate and retain a talented workforce. Founded in 1955,
WorldatWork provides a network of more than 30,000 members and
professionals in 75 countries with training, certification, research,
conferences and community.

It has offices in Scottsdale, Arizona, and Washington, D.C. For more information, visit www.worldatwork.org.

PARC was founded in 2004 to provide a centre of
excellence for the development and management of high performing
organisations. For more information, visit www.parcentre.com.

Hewitt New Bridge Street is the UK's leading
executive remuneration consultancy and is the named adviser in the
Director's Remuneration Reports of 35 FTSE 100 and 90 FTSE 250
companies. We have a single focus — to assist companies design and
implement executive remuneration practices which will help them meet
their business objectives.

Hewitt Associates (NYSE: HEW) provides leading
organisations around the world with expert human resources consulting
and outsourcing solutions to help them anticipate and solve their most
complex benefits, talent, and related financial challenges. Hewitt
works with companies to design, implement, communicate, and administer
a wide range of human resources, retirement, investment management,
health care, compensation, and talent management strategies. With a
history of exceptional client service since 1940, Hewitt has offices in
more than 30 countries and employs approximately 23,000 associates who
are helping make the world a better place to work. For more
information, please visit www.hewitt.com

Media contact: Marcia G. Rhodes, 480-304-6885

This press release was distributed through PR Web by Human Resources Marketer (HR Marketer: www.HRmarketer.com) on behalf of the company listed above.