Insights North America Wealthtech

Receiving Stock Options Can Help Prevent Resignation Finds EquityBee

Propeller Insights, on behalf of EquityBee, the employee-focused stock options funding solution, has conducted a survey of more than 1,000 employed US adults and found that stock options increases employees’ personal investment in the companies they work for, resulting in stronger employee retention. This is ever more needed as we face the Great Resignation. However, in order to do this, employees must be able to exercise those stock options — and many can’t.

“The reality of the workplace is that many stock options remain on the table because startup employees are unable to afford them. That means a significant amount of the workforce won’t share in the potentially life-changing financial windfall, which they otherwise earned, when their companies have a liquidity event. That shouldn’t be the case,” said EquityBee CEO Oren Barzilai. “We created EquityBee to enable startup employees to fully participate in the success of the companies they help build, but there’s a clear benefit to the companies as well.”

Stock options help employees feel more emotionally invested in a company

According to the survey, stock option packages are overwhelmingly positive for both the employees who receive them and the companies that offer them. This is excellent news for companies scrambling to retain employees in the face of the Great Resignation.

  • 92 per cent of American workers surveyed said receiving stock options increases their sense of belonging to a company.
  • 85 per cent said receiving stock options motivates them to work harder for a company to succeed.
  • 89 per cent said stock options could change their financial future for the better.

Unfortunately, 61 per cent of American startup employees said they haven’t been granted stock options through their current employer. Of those who have, more than a third (36 per cent) said their employer didn’t explain their stock options clearly.

Many can’t afford to exercise their stock options

EquityBee data shows that 55 per cent of US stock options go unexercised since employees don’t have the necessary cash or can’t afford the financial risk involved in exercising them and paying the applicable taxes.

The Propeller Insights survey commissioned by EquityBee reveals that more than a quarter (26 per cent) of startup employees who have been granted stock options don’t believe they can exercise, even without considering the tax portion. This includes more men (28 per cent) than women (25 per cent), even though significantly more men (37 per cent) than women (29 per cent) have been granted stock options by their employer.

The data also reveals an interesting generational story: Employees ages 45+ were almost half as likely (21 per cent) as employees ages 18-44 (39 per cent) to say they’d been offered stock options. Further, employees ages 55+ were most likely to say they can’t afford to exercise their stock options.

“EquityBee’s mission is to level the playing field,” added Barzilai. “We pair employees with investors who can help them exercise their stock options.”

Author

  • Francis is a junior journalist with a BA in Classical Civilization, he has a specialist interest in North and South America.

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