Bradley attorney David Joffe was quoted in PlanSponsor on the long-term value of stock options for employers. While equity compensation has not traditionally been used for retirement savings, there are ways to incorporate it into employees’ long-term financial plans.
“I don’t know of many employees, or employers, who view those vehicles as necessarily meant for retirement savings because they are generally tied to a set vesting period—unless it is a publicly traded company,” said Joffe. “There are usually limits to how long an employee can hold those types of stock options, and it may not be possible for them to own it through the time when they retire. They may leave the company or face an event that causes them to sell the stock.”
However, Joffe notes that employee stock ownership plans (ESOPs) are used to save for retirement and are becoming more and more popular, particularly if the company wants to help its employees have greater retirement savings. “A lot of the companies I work with not only have a 401(k) but profit sharing and ESOPs, which provide substantial additional retirement savings,” he said.
The original article, "Employers Begin to See Long-Term Value of Stock Options," appeared in PlanSponsor on February 17, 2021.