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Home > Reference Desk > Research & Statistics >
| Type of Plan | Number of Plans (as of early 2008) |
Number of Participants (as of early 2008) |
Value of Plan Assets (as of early 2008) |
| ESOPs, stock bonus plans, & profit sharing plans primarily invested in employer stock | 9,774 | 11.2 million | $928 billion+ |
| 401(k) plans primarily invested in employer stock | 748 | 1.5 million | $133 billion |
| Broad-based stock option plans | 3,000 | 9 million | (several hundred billion; not realistic to estimate) |
| Stock purchase plans | 4,000 | 11 million | (not realistic to estimate) |
The NCEO estimates are based a variety of company surveys and, where available, government data. Another way to look at the data was provided by several questions included in the General Social Survey (GSS), a 2006 random sampling of working adults performed by the National Opinion Research Center (NORC) of the University of Chicago. Joseph Blasi and Douglas Kruse of Rutgers and Richard Freeman of Harvard, all affiliated with the Shared Capitalism Project of the National Bureau of Economic Research, organized the questions and their analysis. The National Center for Employee Ownership was one of the sponsors of the survey questions, along with the Shared Capitalism Project, the Beyster Institute, and the Employee Ownership Foundation. The Shared Capitalism Project receives support from the Rockefeller and the Russell Sage Foundations.
The GSS data are reported in detail in a separate page on this site. In sum, however, they showed that as of 2006, 20.0% of all employees working in the private sector report owning stock in their companies, while 10.0% held stock options. The two categories are exclusive of one another, but other data indicate that almost all employees holding options also own company stock in other ways. That would mean that approximately 25 million Americans own employer stock through ESOPs, options, stock purchase plans, 401(k) plans, and other plans, while 10.6 million hold stock options (and, usually, other stock). In 2006, 6.1% of employees received an option grant, but because many programs are not annual, the number holding options is much larger. Looked at on the basis of corporate organizational form, in 2006, 34.9% of employees working for for-profit stock corporations held stock in their employer in one form or another, while 14.6% of employees working for stock corporations held options. Because we cannot be certain that everyone understood the question asked about whether they hold options (even though the survey took pains to explain it), we have been cautious in making the estimate. Other survey data reported below confirm this 10 million estimate, so we feel fairly confident it is accurate.
Because of the differing estimating techniques and inevitable ambiguities of data collection and interpretation in this area, however, variations in results are to be expected. These numbers, as well as any other estimates, should always be understood with the caveat that they cannot be precise.
ESOPs (employee stock ownership plans) are stock bonus plans qualified to borrow money; otherwise, the two types of plans are very similar. Estimates for ESOPs in this category are based on data from the Department of Labor and the Internal Revenue Service. Because these data have many imperfections, we have used an estimating technique that we believe is fairly accurate. The estimates were revised in 2007, providing a somewhat lower number of plans than we had reported a few years ago, a somewhat higher number of participants, and a stronger year-to-year growth than previously thought. Details on this estimating technique are in the February 14, 2008, Employee Ownership Update. The data on 401(k) plans is based on surveys from the Employee Benefit Research Institute and the Investment Company Institute for 2006. The stock bonus plans and profit sharing plans included here are similar to nonleveraged ESOPs (they are primarily invested in employer stock and offer distributions in employer stock). Most companies with ESOPs are closely held.
The dramatic growth in plan assets in participants in the last few years appears to result from the better performance of ESOPs companies and a huge increase in the number of ESOPs doing acquisitions.
"Broad-based stock option plans" are those that grant stock options to 50% or more of full-time employees. Unlike the case with ESOPs, it is not realistic to chart the growth of stock options year-by-year because there are no hard data compiled on a comparable basis year-by-year. We can look back at 1990 and estimate roughly a million option holders and look at the present day and estimate roughly 9 million option holders, but it is impossible to accurately say how many employees held options in 1994, 1995, 1996, 1997, etc. Why? ESOPs are highly regulated retirement plans, and companies with ESOPs must tell the government every year how many employees are in the plan. The government regularly publishes summaries of these data. Although it is imperfect, it gives us something to go on. For stock options, on the other hand, nothing of the sort is available.
Our current estimate for employees holding options is based on data from three sources. The first is an NCEO calculation done in the late 1990s that extrapolated from surveys of companies on the issue of what percentage of public companies had plans that included most or all employees as actual grant recipients (rather than just being eligible for grants). We assumed that although many private companies have broad-based plans, the total employment in these companies is relatively small; the number receiving options, we estimated would be one million or less. Using the public companies survey data, some of which was broken down by company size, we estimated how many employees would work for these companies and meet minimal criteria for actually receiving a grant. That number came to about 8 to 10 million in the late 1990s. More recent surveys have some downward movement in the percentage of companies offering broadly granted options through 2007.
The second source is the 2006 General Social Survey of the National Opinion Research Center. The survey's details are available on this Web site. The survey indicates that 10.6 million employees hold options This is the largest of all the surveys. A 2007 Harris Interactive poll asking a similar question showed the number to be about 10 million.
Finally, a 2007 Bureau of Labor Statistics survey indicates that about 8% of all private sector employees (about 9 million people) have stock options. This is down from 9 million in the 2006 survey, but the survey does not track the movement away from options to other individual equity plans, such as restricted stock and stock appreciation rights, which have replaced broad-based options in some companies. The survey indicates that 14% of managers and professionals receive options compared to just 2% of service workers and 5% of workers in mining, construction and maintenance. Twelve percent of employees making over $15 per hour received options, compared to 5% of those making less than $15. Workers in other categories fall in the 8% to 10% range. Thirteen percent of employees in companies with over 100 employees get options, compared to 4% in companies smaller than this. Most geographic areas fell close to the national average, but 11% of the workers in the Pacific region received options, compared to just 5% in the East South Central region.
Looking at the issue more on the basis of company practices, in "Give Everyone a Prize? Employee Stock Options in Private Venture-Backed Firms" (2005, unpublished), John R.M. Hand of the Kenan-Flagler Business School looked at data from 2004 and 2005 provided by VentureOne, a data provider on venture-backed firms. The VentureOne survey reported on the depth of options in 1,032 venture-backed companies responding to the survey for which adequate data were available. The study found the mean percentage of employees getting options was 89%, and 74% of the companies granted options to everyone.
A survey by the National Association of Stock Plan Professionals (NASPP) and Deloitte Consulting showed that companies have cut back somewhat on broad-based equity plans, but that these plans remain an important part of the employee ownership landscape. The survey presents the data in a way that makes it difficult to figure out just what percentage of companies offer awards to most or all employees, but some inferences can be drawn. (To be fair, this was not their primary purpose.)
A 2007 NASPP/Deloitte Consulting "Domestic Stock Plan Design and Administration Survey" found that among the 383 respondents (almost all public companies), the median percentage of employees participating in any kind of equity plan except an ESPP was 15%. Smaller companies were more likely than larger companies to have broad-based participation. The median was 75% or more in companies with up to 750 employees. At least 75% of the companies with fewer than 250 employees reported 100% employee participation in some kind of plan. As company size increases, the percentage drops so that full participation is rare at the largest employers. For companies with more than 10,000 employees, for instance, the 10% of companies with the highest participation levels average about 37% participation, while the typical company of that size has only 4% participation.
Looked at in another way, in companies with more than 30,000 employees, only 3% of the employees hold equity compensation awards. In companies with 251-750 employees, 75% do, while in smaller companies the percentage rises to 100%. The data are based on an equal-weighting for each company, regardless so size.
The data on ESPPs included 348 companies, 60% of which had ESPPs. Of those plans, 77% were qualified plans under Section 423 of the Code. Among companies with 423 plans, 16% reported participation rates of 71% or more, and 29% had participation rates of 50% or more. Non-qualified plans, which unlike Section 423 plans do not have to be broad-based, had much lower participation. A total of 79% of the companies with Section 423 plans said they offer a 15% discount, and another 6% offer a 10% discount. Two-thirds of the 423 plans have a look-back feature in which the purchase price is based on the lower of the stock's price at the beginning or end of the offering period. Offering periods tended to be short, 48% of the companies with Section 423 plans had six-month offering periods, and another 18% had thee-month offering periods.
Employee stock purchase plans (ESPPs) include both tax-qualified "423 plans," which about 2,500 companies offer, and nonqualified plans, which about 1,500 companies offer. Data are based primarily on the National Association for Stock Plan Professionals' Stock Plan Design and Administration Survey (1998 and every two years thereafter), especially the more recent surveys. To estimate the number of employees covered under the plans, we took the total number of companies offering plans, multiplied those numbers by the average number of employees in the companies, and multiplied that number by the average percentage of participation in the plans. Almost all companies with ESPPs are public.
Many companies offer multiple plans, and many employees participate in more than one plan. For example, many ESPP participants are also in 401(k), stock option, or other equity compensation plans. Hence, the total number of participants in all these plans is definitely not the total of the numbers in the "Number of participants" column.
| Year | Number of Plans | Number of Participants |
| 2007 | 9,774 | 11,200,000 |
| 2006 | 9,650 | 10,500,000 |
| 2005 | 9,225 | 10,150,000 |
| 2004 | 9,115 | 10,030,000 |
| 2003 | 8,875 | 9,600,000 |
| 2002 | 8,450 | 9,300,000 |
| 2001 | 8,050 | 8,885,000 |
| 2000 | 7,700 | 8,500,000 |
| 1999 | 7,600 | 8,000,000 |
| 1993 | 9,225 | 7,500,000 |
| 1990 | 8,080 | 5,000,000 |
| 1980 | 4,000 | 3,100,000 |
| 1975 | 1,600 | 250,000 |
1993 was one of two peak years for the number of ESOPs, ironically with the same number as 2005. In the late 1980s, many public companies set up ESOPs. In 1992, accounting rules changed in a way that was less favorable for ESOPs, and public companies moved their contributions of stock from their ESOPs to 401(k) plans and began terminating their ESOPs. Formal plan designation changed, but not substance. Meanwhile, ESOPs in closely held companies were growing, both in numbers and size. ESOP companies tend to grow faster in terms of employment than comparable firms and, in recent years, have become aggressive acquirers of other companies. The numbers for 2007 in this table are for the end of the year and also apply as of early 2008.
Note: In this table, the "Plans" row shows the number of plans and the "People" row shows the number of employees participating in those plans.
1 Includes statutory ESOPs and also plans that are not formally designated as ESOPs but are primarily invested in employer stock and offer distributions in employer stock.
Unlike the case with ESOPs, it is not realistic to chart the growth of stock options year-by-year over this same period, because there is no hard data to go on. We can look back at 1990 and estimate roughly a million option holders and look at the present day and estimate roughly 10 million option holders, but it is impossible to accurately say how many employees held options in 1994, 1995, 1996, 1997, etc. Why? ESOPs are highly regulated retirement plans, and companies with ESOPs must tell the government every year how many employees are in the plan. The government regularly publishes summaries of this data. Although it is imperfect, it gives us something to go on. For stock options, on the other hand, nothing of the sort is available.
| 1990 | $133 billion |
| 1994 | $184 billion |
| 1995 | $226 billion |
| 1998 | $350 billion |
| 2001 | $400 billion |
| 2005 | $600 billion |
| 2006 | $675 billion |
| 2007 | $928 billion |
The above table is based on data released by the U.S. Department of Labor, with updated NCEO estimates. As above, the figure for 2007 is for the end of the year and applies to early 2008 as well.
| Category | 0-10% | 11-30% | 31-50% | 51-100% |
| Private co. ESOPs | 20% | 20% | 30% | 30% |
| Public co. ESOPs | 62% | 34% | 3% | 1% |
| 401(k) plans | 85% | 10% | 5% | 0% |
| Stock options1 | 32% | 65% | 3% | 0% |
1 Percentage is for overhang from options (outstanding, unexercised options plus shares available for future grants, divided by common shares outstanding).
Data for this table were drawn from surveys in Ohio and Michigan in 1994 and 1990, a 1995 NCEO survey of 401(k) plans, a 2000 NCEO survey of companies with broad-based stock option plans, and NCEO databases.
Stock option figures are estimates of the percentage of total outstanding company stock that the options represent. Percentages are higher in smaller companies and high-technology companies. We do not have an estimate for employee stock purchase plans.
Studies on the relationship between employee ownership and corporate performance are primarily limited to ESOPs, both because data are easier to obtain on these companies and because they tend to be more committed to employee ownership than 401(k) plan sponsors, whose plans tend to still own relatively small amounts of the equity of individual companies. The phenomenon of granting stock options to most or all employees is relatively recent and has yielded just one major analysis so far. The principal findings on employee ownership and corporate performance are:
A 2000 study by Joseph Blasi and Douglas Kruse at Rutgers University found that ESOP companies grow 2.3% to 2.4% faster than would have been expected without an ESOP for sales, employment, and sales per employee. The study looked at all ESOP plans set up between 1988 and 1994 for which data was available. A 1987 NCEO study of 45 ESOP and 225 non-ESOP companies found that companies that combine employee ownership with a participative management style grow 8% to 11% per year faster than they would otherwise have been expected to grow based on how they had performed before these plans. Subsequent studies by the General Accounting Office and by academics in Washington State and New York found the same relationship. A 1999 study for Hewitt Associates by Hamid Mehran of Northwestern University found that the returns on assets for 382 publicly traded ESOP companies was 2.7% per year greater than what a model of their predicted performance would have been.
Studies on participative management alone find a small positive impact on performance, but not nearly enough to explain the synergy between ownership and participation these other studies have found.
Data compiled between 1992 and 1998 as part of an ongoing study by Joseph Blasi, Douglas Kruse, Michael Conte, and after 1993, American Capital Strategies, found that an investment of equal amounts in a basket of securities in public companies with more than 10% broad employee ownership would see a return of 170% compared to 143% for the Dow and 152% for the S&P 500. The researchers point out that this does not establish a causal linkage between employee ownership and stock performance because companies that set up these plans may also have certain other consistent features that make them perform better.
A 1995 study by Michael Conte at the University of Baltimore found that during the 1980s, fewer than one out of 100 ESOPs were terminated because of the bankruptcy of the plan sponsor.
The major study on this topic is a 2000 study by Douglas Kruse, Joseph Blasi, Jim Sesil (all of Rutgers University), and Maya Krumova (New York Institute of Technology), who used data from the 1998 version of the NCEO's "Current Practices in Stock Option Plan Design" study. That study provided usable data for 105 companies that made options available to most or all employees. Ninety-one percent of the sample companies were publicly traded; the results here apply only to these companies. The option companies were compared to all non-broad based stock option companies in their industries of similar size (the full sample group) and to paired comparisons of matched non-broad based stock option companies (the paired sample).
Blasi et al. found that productivity rates did improve with the institution of a plan. The difference between productivity scores for the overall sample from the pre-plan period (1985 to 1987) to the post-plan period (1995 to 1997) was 14.8% when the comparison group was all non-option companies and 16.8% when looking just at paired comparisons between option companies and otherwise similar non-option companies. Sampling error can be strongly rejected as an explanation for these results. Return on assets showed a similar pattern. Here the stock option companies showed an improvement of 2.5% on ROA relative to the full sample in the post-plan period compared to the pre-plan period. When just paired comparisons are used, the improvement was 2.05%. Again, sampling error is very unlikely to have caused these results. Total shareholder return, however, showed no statistically significant difference in the relative performance during the two periods, meaning any measured change could simply reflect random sampling error. The researchers thus believe that the any value consequences of dilution caused by broad-based options seems counterbalanced by increased productivity..
A number of other studies looked at whether granting options below the executive level was worth the dilution involved. These studies divided the samples solely into options granted to the top five executives and options granted to everyone else. That category could be a few more managers or everyone, so these data do not clearly address the issue of whether truly broad-based plans are effective. The studies have come to mixed results.
The one major study of private firms is the Hand study referenced above. It found that granting options deeply into the organization to most or all employees is a more efficient strategy for investors than granting them more narrowly.
| % of Private Companies Passing Through Full Voting Rights | 20% |
| % of Majority-Owned Private Companies Passing Through Full Voting Rights | 40% |
| Mean Allocation to Accounts, as a % of Payroll (Private Companies) | 8-10% |
| Mean Allocation to Accounts, as a % of Payroll (Public Companies) | 4-6% |
| Median Number of Employees, Private Companies | 125 |
| Mean Number of Employees, Private Companies | 1,460 |
| Median Number of Employees, Public Companies | 2,100 |
| Mean Number of Participants, Public Companies | 13,984 |
| Percentage of ESOPs That Are in Public Companies | 5% |
Data for this table were compiled from Ohio and Michigan studies, NCEO databases, and studies by Michael Conte at the University of Baltimore.
Copyright © 2008 by The National Center for Employee Ownership (NCEO) (phone 510/208-1300; email nceo@nceo.org; WWW http://www.nceo.org/). All rights reserved.
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