February 20, 2014
A New Reach for Stock Ownership Guidelines?
Over the past five to seven years or so, the prevalence of stock ownership guidelines within organizations has evolved from an emergent to standard practice. By now most of us are comfortable with the concept of stock ownership and share retention guidelines, along with their application to (mostly) executive management.
When Intel Corporation recently disclosed that they had revamped their compensation structure, a segment of the changes caught my attention. Intel has expanded the application of their stock ownership guidelines from 50 to 350 senior leaders in 2014. Could this be the start of a movement towards more mainstream stock ownership requirements within organizations?
A Recap of Trends
In Equilar’s 2013 Stock Ownership Guidelines Report, available in the NASPP’s Stock Ownership Guidelines portal, we are reminded that:
- 89.4% of Fortune 100 companies publicly disclosed executive stock ownership policies in 2012
- The majority of Fortune 100 companies (55.9%) have both stock ownership guidelines and retention policies, versus one or the other
- 82.3% of analyzed companies use a multiple of base salary as the guideline structure
- 85.2% of companies allow a 5-year accumulation period to satisfy their guidelines
Data collected from the NASPP’s 2011 Domestic Stock Plan Administration Survey (co-sponsored by Deloitte Consulting) supports the trends identified above. In the NASPP survey, only 12% of surveyed companies said that their stock ownership policies applied to “other management” (meaning levels below the CEO/CFO, NEO and other senior management levels of the organization). It looks like Intel is now venturing into that territory of “other” management, and I’m curious to know if the reach of ownership policies is now beginning to trend into that category of organizational leadership. In 2011, 17% of respondents in the NASPP/Deloitte survey reported that they had increased the number of employees subject to their policies within the past 3 years. Those aren’t necessarily landslide numbers, but that was also during a time when share ownership guidelines were just gaining a foothold in the upper echelons of corporations.
The trend radar is up, and we’ll be keeping an eye to see if other companies are following suit into expanding the reach of their stock ownership guidelines. If you’re an issuer, take the informal poll below and be one of the first to see if there are signs of a new reach for stock ownership requirements.
-Jennifer