Stock OwnershipPresented by The National Association of Stock Plan Professionals and Deloitte Consulting LLP

2017 Domestic Stock Plan Administration Survey | Methodology

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Table of contentsStock Ownership 3

Participation and Eligibility 3

Guidelines and Requirements 3

Arrangements Counted Towards Guidelines 5

Enforcement and Penalties 6

Retention Periods and Other Ownership Programs 7

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Stock Ownership

5.01 Does your company have ownership guidelines for executives and/or employees? (n=450)

5.03 Ownership guidelines apply to: (Check all that apply.) (n=370)

5.05 If ownership guidelines are based on a set number of shares, how often are the share requirements reevaluated? (n=29)

5.06 If ownership guidelines are based on a multiple or percentage of compensation, is compensation defined as: (n=314)

5.02 Is your company considering implementing ownership guidelines within the next three years? (n=71)

Stock Ownership

Cos. %

Yes 379 84%

No 71 16%

Cos. %

Yes 21 30%

No 50 70%

Cos. %

CEO 368 99%

CFO 361 98%

Other Named Executive Officers 343 93%

Non-Employee Directors 270 73%

Other Senior Executives 223 60%

Other Section 16 Officers 186 50%

Other Management Employees 33 9%

Other Exempt Employees 8 2%

Non-Exempt Employees 3 1%

Cos. %

Periodically, as needed 16 55%

Annually 10 34%

Guidelines are not reevaluated 2 7%

Upon stock price fluctuations greater than plus/minus a specific percentage 1 3%

Other 0 0%

Cos. %

Base salary 293 93%

Total compensation (salary, annual incentives, and long-term incentives) 15 5%

Total cash (salary plus annual incentives) 6 2%

Other 0 0%

5.04 Ownership guidelines are based on: (n=364)

Cos. %

Multiple or percent of compensation 312 86%

Set number of shares 24 7%

Lesser of a multiple/percent of compensation or a set number of shares 14 4%

Set dollar value 9 2%

Lesser of a set dollar value or set number of shares 5 1%

Other 0 0%

Participation and Eligibility Guidelines and Requirements

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Stock Ownership

5.07 If guidelines are based on a multiple or percentage of compensation, what is the multiple or percentage that is most applicable for each category of employee? (Check one multiple for each category of employee.)

Lowest Multiple(Percentage)

CEO(n=226)

CFO and Next Top 3 Executives

(n=222)Other Senior Executives

(n=198)

Other Management

(n=70)

Other Exempt Employees

(n=24)

Cos. % Cos. % Cos. % Cos. % Cos. %

.5 (50%) or lower 1 0% 1 0% 2 1% 5 7% 7 29%

1 (100%) 0 0% 6 3% 45 23% 33 47% 10 42%

1.5 (150%) 0 0% 3 1% 5 3% 1 1% 0 0%

2 (200%) 2 1% 32 14% 61 31% 14 20% 3 13%

2.5 (250%) 0 0% 7 3% 7 4% 1 1% 0 0%

3 (300%) 14 6% 120 54% 51 26% 2 3% 0 0%

3.5 (350%) 0 0% 3 1% 1 1% 0 0% 0 0%

4 (400%) 11 5% 24 11% 3 2% 0 0% 0 0%

5 (500%) 84 37% 7 3% 1 1% 2 3% 0 0%

6 (600%) to 9 (900%) 109 48% 2 1% 0 0% 0 0% 0 0%

10 (1,000%) or higher 5 2% 1 0% 1 1% 0 0% 0 0%

Multiple varies by position 0 0% 16 7% 21 11% 10 14% 4 17%

Other 0 0% 0 0% 0 0% 2 3% 0 0%

5.08 How have the levels for ownership guidelines changed in the last three years? (n=365)

Cos. %

Increased 91 25%

Decreased 9 2%

No change 265 73%

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Stock Ownership

5.09 Which of the following count towards satisfying ownership guidelines? (Check the most relevant choice for each row. Responses below exclude stock options.)

Not OfferedOffered—Does Not Count

Towards GuidelinesOffered—Counts

Towards Guidelines

Cos. % Cos. % Cos. %

Shares owned outright (including shares purchased on the open market, vested restricted stock, or shares acquired from the exercise of stock options.) (n=350)

N/A N/A 3 1% 347 99%

Unvested restricted stock (n=344) 73 21% 61 18% 210 61%

Unvested phantom stock/restricted stock units (n=321) 95 30% 72 22% 154 48%

Unvested performance shares/units (n=327) 36 11% 188 57% 103 31%

Unvested shares in 401(k) plan (n=316) 182 58% 48 15% 86 27%

Unvested shares purchased through the ESPP (n=309) 212 69% 54 17% 43 14%

Unvested shares held in employee stock ownership plan (ESOP) (n=301) 265 88% 18 6% 18 6%

Vested phantom stock/deferred stock units (n=315) 172 55% 15 5% 128 41%

Vested shares in 401(k) plan (n=328) 129 39% 17 5% 182 55%

Vested shares purchased through the ESPP (n=324) 149 46% 9 3% 166 51%

Vested shares held in employee stock ownership plan (ESOP) (n=305) 254 83% 7 2% 44 14%

Shares owned indirectly by a trust or family members (n=305) 67 22% 38 12% 200 66%

Other (n=30) N/A N/A 5 17% 25 83%

Arrangements Counted Towards Guidelines

5.10 How are stock options treated in terms of satisfying ownership guidelines? (n=300)

Cos. %

We grant stock options but they don’t count 143 48%

We count options only after they have been exercised 81 27%

We count only options that are vested (whether or not they are in-the-money) 9 3%

We count only vested, in-the-money options 36 12%

We count all in-the-money options (vested and unvested) 8 3%

We count a percentage of vested options (whether or not they are in-the-money) 1 0%

We count a percentage of vested, in-the-money options 6 2%

We count unvested stock options (but not vested stock options) 0 0%

We count all options 13 4%

Other 3 1%

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Stock Ownership

5.15 If employees have not met required guidelines, how long do you wait before imposing penalties?4 (n=123)

5.16 How often do you track and report on participant performance against the guidelines? (n=350)

5.13 During a phase-in period for new hires or promotions, is progress toward guidelines expected? (n=349)

Cos. %

We conduct periodic reviews to monitor progress towards guidelines 206 59%

No, employees have until the full time noted previously to comply 83 24%

Progress is informally encouraged but not formally monitored and/or enforced 41 12%

Yes, on a pro-rata basis (e.g., if employees are given five years to achieve guideline, then 40% of the guideline should be achieved by the end of the second year)

19 5%

5.14 What penalties, if any, does your company impose for failing to achieve guidelines? (Check all that apply.) (n=338)

Cos. %

Require employees to hold all or a percentage of shares acquired upon exercise of options or vesting/payout of awards

92 27%

Prohibit all sales of shares 53 16%

Require other forms of compensation (e.g., bonus) to be taken in stock 25 7%

Disqualify employees from receiving future equity grants or participating in other program(s) 20 6%

We haven’t had to address the question of penalties yet 139 41%

Other penalties (demotion, termination) 3 1%

No penalties applied 65 19%

Cos. %

Immediately (within one month) 48 39%

1–3 months 2 2%

4–6 months 4 3%

7 months–1 year 2 2%

Longer than one year 4 3%

Determined on a discretionary basis 63 51%

Other 0 0%

Cos. %

Once a year, during proxy season 128 37%

Once a year, but not during proxy season 105 30%

Semi-annually 24 7%

Quarterly 49 14%

Monthly 4 1%

No set schedule for this 30 9%

We don’t track and report on participant performance 9 3%

Other 1 0%

5.11 If stock options count toward the ownership guidelines, are they counted on a one-for-one basis? (n=76)

Cos. %

Yes 56 74%

No 20 26%

5.12 How long (after hire or notification of ownership guidelines) do employees have to meet the guidelines? (n=356)

Cos. %

Less than 1 year 4 1%

1 year 11 3%

2 years 2 1%

3 years 22 6%

4 years 13 4%

5 years 202 57%

6 years 3 1%

More than 6 years 3 1%

No specific time frame, but sales of stock (including stock acquired upon exercise of options or vesting/payout of awards) are restricted until guidelines are met

96 27%

Enforcement and Penalties

4 Response rates are not directly comparable to the 2014 survey as the potential responses are not identical.

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Stock Ownership

5.17 Besides ownership guidelines, does your company have any other program to promote stock ownership? (Check all that apply.) (n=343)

5.19 For companies with a retention ratio, please provide the percentage? (n=26)

5.18 For companies with a retention period, please provide the period shares a required to be held for. (n=26)

5.20 Is the retention ratio percentage specified above applied to the total shares or the net shares issued after taxes? (n=26)

Cos. %

We impose a retention period–i.e., shares acquired from compensation programs (other than to cover taxes or the payment of an exercise price) must be held for a period of time (e.g, six months to 1 year)

27 8%

We impose a retention ratio–i.e., a portion (e.g., 50%) of shares acquired from compensation programs must be held for a period longer than one year (up to the duration of the individual’s employment)

26 8%

We apply a company match to all or a portion of annual incentive deferred into stock or other shares held

9 3%

ESPP and/or 401(k) 152 44%

Other 41 12%

No other programs 150 44%

Cos. %

Specified time period 16 62%

Hold to ownership requirement is met 10 38%

Hold to retirement 0 0%

Other 0 0%

Cos. %

0%-19% 1 4%

20%-39% 3 12%

40%-59% 17 65%

60%-79% 3 12%

80%-100% 2 8%

Cos. %

Total shares issued 2 8%

Net shares issued 24 92%

Retention Periods and Other Ownership Programs

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