UBS
Wealth Management Americas, a division of UBS AG, today introduced
the UBS
Equity Award Value Index™, a groundbreaking tool for measuring how
employees perceive the value of their equity compensation. Increasingly,
employees are looking at their compensation and benefits
comprehensively, and the end of the year is a time for particular
reflection. Equity plays a significant role in many compensation plans;
therefore, understanding how participants perceive the value of those
awards becomes critical to employers and employees.
The Value Index shows that 26% of participants perceive high or
considerable value from their equity, with 43% perceiving minimal or no
value. In addition, nearly half of all participants (47%) view their
equity awards as a way to build wealth, while many (36%) view them as a
paycheck supplement, and a significant portion (17%) view them as a
"lottery ticket".
"The UBS Equity Award Value Index has the potential to be a compensation
and benefits game-changer because it sets a benchmark for measuring
perceived value," said Michael Barry, head of UBS Equity Plan Advisory
Services. "Only 26% of participants from a cross-section of industries
and service providers highly value their awards. There's clearly a lot
of runway for our industry to show employees that equity compensation is
an important way to build wealth."
The Index is based on data from a national survey of nearly 600 equity
plan participants from a cross-section of companies, industries and
service providers.
Understanding the perceived value of equity comp
In 2012, companies in the Russell 3000 Index granted their most valued
employees equity awards worth more than $110 billion. Companies often
grant these awards to attract and retain the best talent available.
However, until now there has been no reliable market-wide index to help
determine if the equity awards were having the desired effect on
employees.
"Do employees truly value their equity awards? Do equity awards help
attract and retain top talent? These are common, industry-wide
questions. Now, this index helps answer these questions," said Barry.
To develop the Equity Award Value Index UBS gathered data around five
key perceptions: how much value employees assign equity awards; the
award's importance in either staying at a current job or accepting a new
one; equity's role in accumulating wealth or savings; and whether
employees' long term financial plans consider a role for equity awards.
The index was launched as part of the UBS Participant Voice, a
semi-annual survey designed to generate insights about employees'
attitudes and behaviors towards equity compensation awards.
Importance of equity compared to other benefits
When comparing equity awards to other forms of compensation, more
experienced participants view equity compensation as rivaling the
importance of their base salary in terms of helping them accumulate
wealth. Whereas moderately experienced participants view equity
compensation on a par with cash bonuses. Participants who have vested
fewer than three times find equity awards to be the least valuable form
of compensation for wealth accumulation. For all participants, base
salary and healthcare benefits were the two most critical factors in
taking or staying at a job.
"Experience with equity awards drives participants' perception of their
value," said Emily Pachuta, Head of Investor Insights, UBS Wealth
Management Americas. "Employees now look at their compensation and
benefits as a total package. We do expect healthcare benefits to remain
a significant factor in employee acquisition and retention, given an
aging population and Baby Boomers' desire to keep working. However,
equity compensation is a very important benefit for employees,
particularly when it comes to building wealth."
Differences in investor confidence and financial concerns
Participants with three to five vesting experiences are the most engaged
with their awards from the day they receive their grant up to one month
prior to vesting. This group is frequently checking the stock price
(49%) and planning for what to do on vesting day: setting a mental sell
price (44%), modeling the potential value of the award (39%), and
thinking about what to do with the proceeds (35%). Once shares have
vested or options are in the money, those with six or more vesting
experiences are more likely to take action when the stock is at their
mental sell price. Those participants with fewer than three vesting
experiences are significantly more likely to be unsure of their plans
post-vesting.
According to the study those with up to two vesting experiences are more
likely to: focus on avoiding losses (71%), be least prepared in terms of
retirement planning (45% highly prepared), and be less confident about
achieving their financial goals. Those with three to five vesting
experiences are more likely to: worry about the economy and the markets
affecting their compensation, feel the most momentum with their
financial situation (improved from last year and expect to improve in
the next year), and be less optimistic about short-term (next 12 months)
outlook on the U.S. economy. Participants with six or more vesting
experiences are more likely to: be most prepared in terms of retirement
planning (55% highly prepared), worry about missing out on market gains
(42%), and hold a VP-level or above position at their company.
UBS Equity Plan Advisory Services currently serves more than 130
companies representing more than one million participants in over 150
countries, delivering customized solutions and providing access to
advice to all plan participants. UBS Equity Plan Advisory Services
provides both partial and full plan administrative services, offering
customized plan administration based on specific company needs.
In the past four years, UBS has invested nearly $200 million to bring
clients cutting-edge technology and industry expertise. UBS Equity Plan
Advisory Services earned the highest rating for partial and a top rating
for full administration services, the only firm to be so highly rated in
both categories, in the Group Five 2013 Stock Plan Administration
Satisfaction Study.
We invite you read the full report here:
http://www.ubs.com/us/en/wealth/misc/ubs-participant-voice.html
Methodology
The survey was fielded from September 24 – 30, 2013. It was an online,
blind survey conducted of investors and clients using an external vendor
(Research Now). 579 plan participants, who currently receive equity
compensation from their company, completed the survey.
Notes for Editors
About UBS Wealth Management Americas
UBS Wealth Management Americas provides advice-based relationships
through financial advisors who deliver a fully integrated set of
products and services specifically designed to address the needs of
ultra-high net worth, high net worth and core affluent individuals and
families. It includes the Wealth Management U.S. business, the domestic
Canadian business and the international business booked in the United
States.
About UBS
UBS AG and its subsidiaries draw on a 150-year heritage to serve
private, institutional and corporate clients worldwide, as well as retail
clients in Switzerland. Its business strategy is centered on its
pre-eminent global wealth management businesses and its universal bank
in Switzerland. Together with a client-focused Investment
Bank and a strong, well-diversified Global
Asset Management business, UBS will drive further growth and expand
its premier wealth management franchise.
UBS is present in all major financial centers worldwide. It has offices
in 57 countries, with about 35% of its employees working in the
Americas, 36% in Switzerland, 17% in the rest of Europe, the Middle East
and Africa and 12% in Asia Pacific. UBS employs about 62,000 people
around the world. Its shares are listed on the SIX Swiss Exchange and
the New York Stock Exchange (NYSE).
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Copyright Business Wire 2013