Recent Trends in Global Stock and Incentive Plan Prevalence and Practices

Offering equity incentives to employees around the globe is a common practice for multinational corporations.

While global stock plans are considered a norm in offering stock based compensation to workers, understanding the prevalence of equity award types and other stock plan design practices are of interest to stock and compensation professionals.

The NASPP and Deloitte Consulting LLP partnered in conducting the 2021 Equity Incentives Design Survey, which addresses equity incentive design practices both within and outside the United States (US).

Here are a few things to know about recent trends in global stock plan design.

Full value awards with time-based vesting are the most prevalent equity compensation vehicle offered to employees outside of the U.S.

In a recent podcast episode on the survey data, Mark Miller of Deloitte Consulting reports that only 8% of survey respondents do not offer equity incentives to employees outside of the country where the company is headquartered.

This means that 92% of responding companies with employees outside of their HQ location do offer some form of stock compensation to employees in other countries.

A majority of companies do not adjust equity award sizes when making grants to employees outside of the headquarters country.

Each country has its own unique factors that influence worker compensation. Along those lines, surprisingly less than half of survey respondents said they adjust the size of equity grants when issuing stock compensation outside of the country where their headquarters (HQ) is located.

This suggests that for the majority of companies offering stock compensation outside of their location, the same criteria is used in determining grant sizes.

For example, an organization headquartered in the United States also has workers in India. The average monthly pay for worker in India is $32,800 rupees, which equates to about $437 US dollars.

In comparison, the average monthly pay for a US worker is $5,378.

Following the trend that many companies do not adjust equity grant sizes outside their headquarters country, our example company decides to award each of their mid-managers 500 RSUs. This same amount applies to all mid-managers, regardless of location. So, the employee in India makes out far better as a percentage of compensation than the employee in the US.

This non-variability in grant adjustments was one of the more surprising trends observed in the survey data, Mark suggests. He also points out that what’s not known is the reasoning behind a company’s decision to not adjust equity award sizes.

One possibility is that perhaps a company might only have a handful of employees in a particular area, which could mean the administrative burden of determining which adjustments to make might tip the scale in favor of a streamlined grant size approach.

The United Kingdom claims the top spot for companies to offer equity awards outside of the country of their headquarters.

96% of non-UK based employers who offer equity incentives outside of their HQ country, and have workers in the UK, offer stock compensation to some or all of their United Kingdom based employees.

Full value awards are the most prevalent form of equity compensation offered by non-UK companies to employees in that jurisdiction, issued by over 90% of the organizations that make equity awards.

For additional trends, including more insights on the United Kingdom, what to keep on your radar when offering equity incentives to employees in Canada, and data on qualified stock plans, check out the following resources:

Podcast: Trends in Global Equity Incentives

Benchmark Data: 2021 Equity Incentives Design Survey