Data Shows Growing Appetite for Equity Compensation Amid Market Volatility: Morgan Stanley at Work Study

• Employees increasingly consider equity compensation a key motivator
• Economic uncertainty looms over shifting HR and employee attitudes
• Data shows perception gap concerning equity education effectiveness

Morgan Stanley at Work today issued equity compensation-related results from its fifth annual State of the Workplace Financial Benefits Study, exploring how US employees and HR executives at public and private companies view equity compensation.

The data suggest that in a complex economic environment, employees are turning toward equity compensation as a key motivator and financial ballast to help them align their financial interests with that of their companies. And while HR leaders agree equity remains a key tool for talent management strategies, gaps between HR and employee views indicate important opportunities for improving equity plan education and engagement.

Key findings from the study include:

• Despite volatility, HR leaders recognize long-term value in equity: Amid uncertain markets, HR execs still agree the most important advantage of equity compensation for employees lies in helping them meet long-term investing goals, such as retirement.
• Private company liquidity still in focus amid uncertainty: 67% of employees and 88% of HR leaders at private companies say the prospect of a future liquidity event or IPO is important to them, indicating that even as private companies move cautiously amid an uncertain economic backdrop there is a need for liquidity solutions and planning.
• Employees increasingly see equity as a key motivator and wealth generator: Almost half (48%) of employees completely or strongly agree that equity is the most effective way to keep them motivated and engaged in their roles. They also say the top three biggest benefits of equity compensation are that it are that it offers them a stake in their company's success (28%), helps them meet long-term investing goals such as retirement (23%) and provides an additional source of income (22%).

"Equity compensation is understood as a strategic necessity not just for executives but across all levels of the organization, aligning employee and company interests even in volatile times," said Craig Rubino, Head of Corporate Relationship Management and Engagement at Morgan Stanley at Work. "As awareness and interest in equity plans grow, it's crucial that we continue to enhance education, support and access so companies can leverage this tool to boost both employee satisfaction and organizational performance."

Yet data highlights ongoing opportunities to improve equity program engagement and efficacy:

• Employees want equity compensation—and guidance to maximize its benefits: More than 4 in 5 (84%) employees say they would be interested in receiving equity compensation. And those that do receive equity want more support: Over a third (34%) say that help maximizing equity compensation or employee stock purchase plans as part of their financial benefits is essential to meeting their financial goals—and nearly half of HR leaders (49%) agree.
• HR leaders more likely than employees to say equity education programs are effective: 36% of employees and 43% of HR leaders rate their company's equity participant education program as very effective, indicating that while equity education is making a difference, there is an ongoing need to help employees better understand and integrate their equity into a comprehensive financial approach. In fact, 20% of HR leaders have heard employees express worry or concern about not knowing how to fully utilize equity compensation or employee stock purchase plans.

"In today's market uncertainty, we're seeing that employees increasingly see equity compensation as a powerful force in helping them align their financial interests with the long-term success of their companies," said Kate Winget, Chief Revenue Officer of Morgan Stanley at Work. "Cutting through the current market noise, both employees and HR leaders recognize the profound potential of equity to help unlock long-term personal and organizational strategic goals."

Additional details are available in Morgan Stanley at Work's State of the Workplace Study here. As part of a series of findings from Morgan Stanley at Work's fifth annual study, the business will also publish its findings on financial benefits and retirement benefits in the coming weeks.

Methodology: The data from the Morgan Stanley at Work Employees Survey and HR Leaders Survey comes from a survey of 1,000 U.S.-employed adults and 600 HR leaders for companies by Wakefield Research (www.wakefieldresearch.com).

About Morgan Stanley at Work

Morgan Stanley at Work provides workplace financial benefits that build financial confidence and foster loyalty—helping companies attract and retain top talent. Our end-to-end solutions support your organization at any stage of growth through a powerful combination of modern technology, insightful guidance, and dedicated service; they include Equity, Retirement, Deferred Compensation, Executive Services, and Saving and Giving solutions. And while we're fulfilling your company's benefits needs, we're also enhancing your employees' financial well-being. Each benefit solution also includes our engaging Financial Wellness program, which provides employees with knowledge, tools, and support to help them make the most of their benefits and achieve their life goals.

About Morgan Stanley Wealth Management

Morgan Stanley Wealth Management is a leading financial services firm that provides access to a wide range of products and services to individuals, businesses, and institutions, including brokerage and investment advisory services, financial and wealth planning, cash management and lending products and services, annuities and insurance, retirement, and trust services.

About Morgan Stanley

Morgan Stanley (NYSE:MS) is a leading global financial services firm providing a wide range of investment banking, securities, wealth management and investment management services. With offices in 42 countries, the Firm's employees serve clients worldwide including corporations, governments, institutions and individuals. For further information about Morgan Stanley, please visit https://www.morganstanley.com/.

Morgan Stanley Wealth Management is the trade name of Morgan Stanley Smith Barney LLC, a registered broker-dealer in the United States.

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