trends in espp design - computershare€¦ · presentation is general in nature and based on...

TRENDS IN ESPP

DESIGN

ESPP Offerings

1

› All Things ESPP Webinar Series www.computershare.com/allthingsespp

› ESPP Day Conference February 8, 2018 | New York, NY www.computershare.com/esppday

Disclaimer

2

This webinar and the views expressed herein are not intended to provide legal, tax, accounting or other professional advice. The information contained in this presentation is general in nature and based on authorities that are subject to change. Applicability to specific situations should be determined through consultation with your legal and/or tax advisor.

Asking Questions

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Enter your question into the Questions pane on the GoToWebinar Control Panel.

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Introductions

Julia Franke, CEP Associate Director, AON Equity Services

TRENDS IN ESPP

DESIGN

Prepared by Aon Aon is part of Aon Hewitt, a business unit of Aon plc.

Trends in ESPP Design

Julia Franke, CEP – Aon Equity Services

August 2017

Aon

Proprietary & Confidential

Introduction

Data

Plan Design Summary

Plan Design Details

Participation

Aon

Proprietary & Confidential

Plan design features

Plan Type

Non-qualified

423B Qualified

Look-Back

No Look-Back

Look-Back

Discounts

0% - Employer Match

0% - No Match

5%

10%

15%

Other

Length of Purchase Period

Annual

Monthly

Quarterly

Semi Annual

Other

Aon

Proprietary & Confidential

Plan Type

423B Tax-Qualified plans showed higher average annual contributions and higher participation rates

Non-qualified

423B Qualified

Aon

Proprietary & Confidential

Plan Type

423B Tax-Qualified plans showed higher average annual contributions and higher participation rates

16%

17%

18%

19%

20%

Non-Qualified 423B Qualified

Ave

rag

e P

art

icip

ati

on

Ra

te

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

Non-Qualified 423B Qualified

Ave

rag

e A

nn

ua

l C

on

trib

uti

on

Aon

Proprietary & Confidential

Plan Type by Market Cap

0%

5%

10%

15%

20%

25%

30%

Small Cap Mid Cap Large Cap

Pa

rtic

ipa

tio

n R

ate

s

Non-Qualified 423B Qualified

Aon

Proprietary & Confidential

Length of Purchase Period

Longer purchase periods lead to higher contributions and participation up to a point (semi-annual), after which longer periods lead to lower contributions and participation

Annual

Bi-Weekly

Monthly

Quarterly

Semi Annual

Other

Aon

Proprietary & Confidential

Length of Purchase Period

Annual contribution amounts follow a similar pattern as the participation rates

0%

5%

10%

15%

20%

25%

30%

35%

Monthly Quarterly Semi Annual Annual

Ave

rag

e P

art

icip

ati

on

Ra

te

Average Participation Rate w/ Look-Back

0%

5%

10%

15%

20%

25%

30%

35%

Monthly Quarterly Semi Annual Annual

Ave

rag

e P

art

icip

ati

on

Ra

te

Average Participation Rate w/o Look-Back

Aon

Proprietary & Confidential

Length of Purchase Period by Market Cap

0%

5%

10%

15%

20%

25%

30%

35%

Small Cap Mid Cap Large Cap

Pa

rtic

ipa

tio

n R

ate

s

Monthly Quarterly Semi Annual Annual

Aon

Proprietary & Confidential

Discount

Larger discounts lead to higher contribution rates and participation rates

Employer match features drives participation, but not contribution levels

0% w/o Employer Match

0% w/ Employer Match

5%

10%

15%

Other

Aon

Proprietary & Confidential

Discount

0%

5%

10%

15%

20%

25%

30%

0% w/oEmployer

Match

0% w/Employer

Match

5% 10% 15%

Ave

rag

e P

art

icip

ati

on

Ra

te

Discount

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

0% w/oEmployer

Match

0% w/Employer

Match

5% 10% 15%

Ave

rag

e A

nn

ua

l C

on

trib

uti

on

Discount

Aon

Proprietary & Confidential

Discount by Market Cap

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Small Cap Mid Cap Large Cap

Pa

rtic

ipa

tio

n R

ate

s

0% w/o Employer Match 0% w/ Employer Match 5% 10% 15%

Aon

Proprietary & Confidential

Discount by Industry

0%

10%

20%

30%

40%

50%

60%

Part

icip

ati

on

Rate

s

Discount

Participation Rates vs. Discount by Industry

0% w/o Employer Match 0% w/ Employer Match 5% 10% 15%

Aon

Proprietary & Confidential

Look-Back

Approximately 32% of companies offer a plan with a Look-Back feature

Companies which offer plans with a Look-Back period see higher average contributions and participation rates

No Look-Back

Look-Back

Aon

Proprietary & Confidential

Look-Back

0%

5%

10%

15%

20%

25%

30%

No Look-Back Look-Back

Ave

rag

e P

art

icip

ati

on

Ra

te

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

No Look-Back Look-Back

Ave

rag

e A

nn

ua

l C

on

trib

uti

on

Aon

Proprietary & Confidential

Look-Back by Market Cap

0%

5%

10%

15%

20%

25%

30%

35%

Small Cap Mid Cap Large Cap

Pa

rtic

ipa

tio

n R

ate

s

No Look-Back Look-Back

Aon

Proprietary & Confidential

Look-Back by Industry

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

Av

era

ge Y

earl

y C

on

trib

uti

on

s

Average Yearly Contributions vs. Look-Back by Industry

No Look-Back Look-Back

Aon

Proprietary & Confidential

Participation by Domicile

• Computershare provided enrollment data for 115 different companies in 186 different domiciles

• The 186 domiciles are predominantly different countries, except for the USA, which is broken down into domiciles by state/territory

• Aon has used this data to analyze participation rates by domicile

• For example, there are 5,403 eligible participants in Alaska and 874 are enrolled

• Therefore, the domicile of Alaska was assigned a participation rate of 16.18% (874 / 5,403)

• The overall participation rate across all domiciles is 11.32%

Aon

Proprietary & Confidential

Weighted Average Participation Rate by Continent

• The participation rate of eligible participants is fairly consistent throughout the US and Internationally

• The overall average participation across all Domiciles is 11.32%.

• Europe and North America have lower participation rates compared to the other continental regions across the world.

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

Europe North America Oceania Africa Asia South America

Aon

Proprietary & Confidential

0%

5%

10%

15%

20%

25%

30%

Europe North America Oceania Africa Asia South America

Pa

rtic

ipa

tio

n R

ate

s

Look-Back No Look-Back

Look-back by Continent

Aon

Proprietary & Confidential

Discount by Continent

0%

5%

10%

15%

20%

25%

30%

Europe North America Oceania Africa Asia South America

Pa

rtic

ipa

tio

n R

ate

s

0% w/o Employer Match 0% w/ Employer Match 5% 10% 15%

Aon

Proprietary & Confidential

Purchase Period by Continent

0%

10%

20%

30%

40%

50%

60%

70%

Europe North America Oceania Africa Asia South America

Pa

rtic

ipa

tio

n R

ate

s

Monthly Quarterly Semi Annual Annual

Aon

Proprietary & Confidential

Contact Information

Julia Franke, CEP

Associate Director

Aon Equity Services

jfranke@radford.com

(215) 589-5558