The NASPP Blog

Retirement provisions constituted the most anticipated area of results in the 2013 Domestic Stock Plan Design Survey. I received several requests for a peek at the preliminary results in advance of our release of the final results. Now that the final results are available, I thought a summary of the data might be of interest to my readers.

This week I look at the results from the NASPP’s 2013 Domestic Stock Plan Design Survey (co-sponsored by Deloitte Consulting). Next week, I’ll augment these results with data from the NASPP’s March 2014 Quick Survey on Retirement Provisions.

The 2013 Domestic Stock Plan Design Survey Results

• Automatic Payouts to Retirees:  Just over 50% of respondents provide some sort of automatic payout to retirees–either full or pro-rata accelerated or continued vesting. Depending on the type of grant, another 5% to 17% provide a discretionary payout or some other type of payout.
• Accelerated vs. Continued Vesting:  For time-based restricted stock/units, acceleration of vesting (28%) edges out continuing to vest awards after retirement (23%). But, for stock options, the opposite is true–continued vesting upon retirement (27%) just edges out accelerated vesting (24%). And, for performance awards, continuing to vest (in other words, paying the awards out to retirees only at the end of the performance period rather than at retirement) wins by a landslide (44% vs. 8% or respondents). This makes sense–performance awards that pay out at retirement are problematic for a host of reasons: for starters, they provide the wrong incentive to potential retirees and don’t qualify as performance-based compensation under Section 162(m).
• Full vs. Pro-Rata Vesting:  For time-based awards, full vesting (vs. pro-rata vesting) is most common:  30% vs. 21% of respondents for RS/RSUs and 41% vs. 10% of respondents for stock options.  But for performance awards, pro-rata vesting is more common (34% of respondents vs. only 18% that provide full vesting).

To be continued…tune in next week for the exciting conclusion to our foray into the world of retirement.

– Barbara