Stock Ownership Guidelines for Executives: Key Trends

Stock ownership guidelines for executives are now de rigueur at publicly held companies, driven by sustained pressure from investors, proxy advisory firms, and the media. But while ownership guidelines have become commonplace, there are still many nuances in how companies design and enforce them.

In today’s blog, I discuss key trends in stock ownership guidelines based on the NASPP/Deloitte Tax 2025 Equity Administration Survey, with a particular focus on how companies are responding to market volatility and evolving proxy advisor expectations.

1. The Prevalence of Stock Ownership Guidelines Continues to Grow

Stock ownership guidelines have evolved significantly over the past two decades. In 2004, fewer than 40% of public companies imposed ownership guidelines on executives. Since then, adoption has more than doubled.

According to the survey, 88% of respondents now have executive stock ownership guidelines, up from 85% in 2020. While growth has slowed somewhat as adoption nears saturation, ownership guidelines are clearly a well-established governance practice among public companies.

2. Ownership Guidelines Typically Apply to Named Executive Officers

Not surprisingly, ownership guidelines are most often applied to a company’s highest-ranking executives. Among survey respondents with ownership guidelines, virtually all apply the requirements to their CEO, CFO, and other named executive officers (NEOs).

Below the top tier, ownership guidelines are far less common:

• Only about half of respondents impose ownership requirements on other senior executives.
• Virtually no companies extend ownership guidelines below senior management.

This approach makes sense. Holding a significant amount of stock in a single company introduces concentration risk. Limiting this exposure to the highest-paid executives—who are generally better positioned to bear that risk—seems appropriate. Moreover, shareholder and proxy advisor attention tends to focus primarily on executive ownership, not ownership levels deeper in the organization.

Interestingly, the survey also shows a decline in ownership guidelines for outside directors. Only 45% of respondents impose ownership requirements on directors, down from 72% in 2020. This suggests a meaningful shift in practice, potentially reflecting evolving views on director compensation, liquidity needs, or the relative importance of ownership guidelines in proxy advisor evaluations.

3. Executives Typically Must Own a Multiple of Salary

Most companies continue to use a value-based approach to establish ownership requirements. Among survey respondents:

• 86% require executives to own stock equal to a multiple of compensation.
• An additional 4% specify ownership as a fixed dollar value.

These figures are largely consistent with the 2020 survey and reflect the continued dominance of salary-based ownership multiples as the market norm.

Mitigating the Impact of Stock Price Volatility

One drawback of value-based ownership guidelines is their sensitivity to stock price fluctuations. A sudden market-driven decline in stock price can quickly push executives out of compliance—even when company fundamentals remain strong. In such cases, companies may be understandably reluctant to require executives to purchase additional shares immediately.

The survey highlights several approaches companies use to mitigate the effects of market volatility on ownership compliance:

• Average Price Method
  Use a multiday average stock price, rather than a single spot price, to calculate the value of executive holdings. This approach—often used for equity grant sizing—can also help smooth volatility for ownership guideline purposes.
• Higher of Cost or Market
  Value executive holdings at the higher of (1) current market value or (2) the executive’s cost basis in the shares.
• Fixed Share Requirement
  Instead of a compensation multiple, require executives to own a fixed number of shares. About 5% of survey respondents use this approach. Initial share requirements are often based on compensation levels and stock price at the time the guideline is adopted.
• Hybrid Approach
  Some companies blend value- and share-based approaches by requiring executives to own:
  • the lesser of a multiple of salary or a fixed number of shares (4% of respondents), or
  • the lesser of a set dollar value or a fixed number of shares (1%).
• Once in Compliance, Always in Compliance
  Once executives meet the ownership requirement, they are deemed compliant as long as they maintain the same number of shares, even if the stock price declines.
• Temporary Suspension
  Temporarily suspend enforcement of ownership guidelines for a defined period or until the stock price stabilizes.

These design choices allow companies to preserve the intent of ownership guidelines without forcing potentially ill-timed share purchases during periods of market stress.

4. CEOs Typically Face the Highest Ownership Requirements

CEOs are almost always subject to the most stringent ownership requirements. According to the survey:

• 84% of companies require the CEO to own stock with a value of at least 5x salary, down slightly from 89% in 2020.

Within that group, however, ownership expectations have shifted upward:

• Fewer companies now require exactly 5x salary (23% in 2025, down from 34% in 2020).
• More companies require ownership of 6x to 9x salary (56% in 2025, up from 49% in 2020).
• Requirements of 10x salary remain relatively rare and stable (5% in 2025 versus 6% in 2020).

Ownership requirements decrease for lower-ranking executives:

• CFOs are typically required to own stock worth 2x to 4x salary, with 3x salary being the most common requirement (55%).
• Other NEOs generally face requirements of 1x to 3x salary, with 46% of survey respondents requiring 3x salary.

5. Which Equity Awards Count Toward Ownership?

While shares owned outright almost always count toward ownership guidelines, practices vary widely when it comes to equity awards.

Many companies exclude equity awards altogether when calculating ownership. Among those that do include equity awards:

• Service-based full-value awards (restricted stock and RSUs) are the most commonly included, counted by about 60% of respondents.
• Only about 25% of companies include unexercised stock options. Where included, companies typically count only vested, in-the-money options, reflecting the executive’s ability to acquire shares immediately.
• Just 21% of respondents count unvested performance awards toward ownership requirements.

The Influence of Proxy Advisor Policies

These practices are heavily influenced by proxy advisor guidance, particularly from ISS. In its U.S. Procedures & Policies (Non-Compensation) FAQ, ISS states that if ownership guidelines allow executives to count unearned performance awards or unexercised stock options toward compliance, the company will not receive credit for having ownership guidelines.

ISS does, however, give credit for ownership guidelines that count Unvested time-based restricted stock and RSUs, which vest automatically without requiring exercise.

ISS also emphasizes the importance of clear disclosure, encouraging companies to specify exactly which types of equity awards—vested or unvested—count toward ownership goals.

Why ISS “Credit” Matters

ISS considers executive stock ownership guidelines in several contexts:

• Governance QualityScore
  Ownership guidelines are one of many factors used to calculate a company’s Governance QualityScore (rated from 1 to 10). While this score does not directly affect vote recommendations, it may influence institutional investor perceptions.
• Say-on-Pay
  Ownership guidelines are viewed as a risk mitigation practice, though they are not a material factor in ISS’s overall Say-on-Pay analysis.
• Nonemployee Director Compensation
  ISS considers ownership guidelines or holding requirements when evaluating director compensation programs and director Say-on-Pay proposals, but they are just one of many factors considered.
• Shareholder Proposals on Holding Periods
  ISS evaluates the presence and strength of ownership guidelines when assessing shareholder proposals related to executive holding periods, but here again, they are not the only factor considered.

As these examples illustrate, while ISS considers ownership guidelines in multiple analyses, the absence of ownership guidelines is not usually a deal-breaker. This may help explain the recent shift away from ownership requirements for directors.

Learn More

For additional insights into stock ownership guidelines—see the NASPP/Deloitte Tax 2025 Equity Administration Survey. For more highlights on equity plan administration practices, check out our webinar highlighting the results of the survey.