Trends: 2020 Aggregate Share-Based Compensation

Companies looking for data stock plan share usage will be interested in Frederic W. Cook’s 2020 Aggregate Share-Based Compensation report.

The report looks at share usage trends at 300 companies over a three-year period (2017-2019) and includes the following:

• Company-wide annual grant rates, measured based on annual share usage and fair value transfer (“FVT”).

• Overhang, measured based on potential share dilution as well as the fair value of outstanding grants.

• Frequency and prevalence of long-term incentive plan share requests.

• Allocation of long-term incentive pools to the CEO and other proxy officers (“Top 5”).

 
Highlights of findings stated in the report include:

• Annual fair value transfer rates as a percentage of market capitalization were generally stable compared to the prior study (published in 2017), with the median 3-year average annual rate decreasing from 0.95% in the prior study to 0.92% in the current study.

• Potential dilution from outstanding equity awards has trended downward over the last three years, falling from 3.2% at the median in 2017 to 2.7% in 2019. This continues a trend observed over the last twelve years.

• Allocation of the long-term incentive pool to the CEO and to the Top 5 proxy reported officers is closely linked to company size as small-cap companies grant a significantly higher percentage of the overall pool to their top officers compared to large-cap companies, who generally have more long-term incentive participants.

• Over the three-year period, 58% of sampled companies sought shareholder approval of a new employee stock plan share authorization, with median size of request being approximately 4% of common shares outstanding.

Additional insights and analysis are available in the full report.