Will employee equity plans remain viable in the future, or will they be one of the “legacy” benefits on the recession chopping block?

That’s the question a new survey by WorldatWork, Performance and Reward Centre (PARC) and Hewitt New Bridge Street sought to answer, and the response is loud and clear, the sponsors maintain.

A majority of 843 respondent companies (70% U.S.-based) indicated equity plans are still considered to be an important part of total rewards, and they have no plans to cut back on them in the next 24 months. In fact, more than 70% of companies that are able to operate some type of employee equity plan choose to do so.

Such commitment is interesting, given that less than 10% of the employers indicated that a majority of eligible employees are participating in employee stock purchase plans (ESPPs). Also, at least 80% of respondents indicate their options are underwater (i.e., the current share price is lower than the option price) and the majority of that group has taken no action to address the situation.

The study looked at the prevalence of three types of employee share plans: options, free/restricted shares and ESPPs in companies in the U.S., U.K. and Western Europe. It found:

* Company size is important in predicting the presence of employee equity plans; they are more common among companies with 20,000 or more full-time employees.

* Industry is more important than geography in predicting the presence of an employee equity plan: these are most common among technology firms and financial institutions; least prevalent in consumer goods, manufacturing and consumer services.

* Substantive changes are not planned to pricing strategy relative to market in the next 24 months. In the U.S., most options will still be offered at market value while most ESPP shares will continue to be offered at a discount to market (discounts typically range from 5 to 15% below market price).

* A majority of plans have eligibility restrictions: first by level, then by location.

“All signs indicate that stock equity plans will remain as an employee benefit especially at large companies,” said Ryan Johnson, CCP, vice president of research at WorldatWork. “To maximize an equity plan’s value, employees need help understanding the risks and benefits. It is no longer enough for companies to offer equity; they also need to give employees the know-how to empower them to make good decisions.”