PwC's Stock Compensation 2018 assumption and disclosure study presents our analysis of the 2017 calendar year-end assumptions and disclosures separately for large, non-high tech US public companies and for high tech US public companies.
In preparing this year’s study, we considered only companies with a late December fiscal year-end that reported stock compensation expense in their 2017 Form 10-K. Our "large company" group is comprised of the top 100 non-high tech companies based on market capitalization in the S&P 500 meeting the reporting criteria. We also looked at a "high tech company" group, consisting of the top 100 companies on the NASDAQ technology, biotech, and pharmaceutical industry lists (equally distributed) also meeting our reporting criteria.
Results are shown separately for each group of companies and presented for these companies over the most recent 5 years. The study looks at stock option valuation methods and assumptions, trends such as granting more value with restricted stock awards vs. stock option awards, and vesting, performance and post-vesting criteria.
Over the last 5 years, the shift from stock options to restricted stock awards has been consistent. In terms of group median number of awards granted, stock options granted slightly exceeded the number of restricted shares granted for our large companies.
But, from a value granted perspective, at the median, restricted stock value is now more than 4 times the value of stock options granted for the group.
Over the last 5 years, at the median, the High Tech companies have also shown a shift in the mix from stock options to restricted stock awards. From a unit/count perspective, stock options granted have run about double the number of restricted stock grants for our high tech companies.
But from a value granted perspective, at the median, restricted stock has exceeded the value of stock option awards for 3 years running, and in 2017, has exceeded the value of stock options by more than 50%.
Partner, PwC US
Manager, PwC US