Retailers once again are promoting layaway. Budgets have tightened and credit cards have become increasingly used for subsistence. Layaway offers companies a way to get a committed customer before an item is delivered. It allows them to collect a bit of revenue stream with every payment adding to the stickiness of the relationship. How does this apply to your pay programs?
Employee Stock Purchase Plans are an anomaly in compensation. There aren’t a lot of compensation tools that require employees to pay their company before the company pays them. Even with this unique structure, ESPPs get almost no respect from many executives. One of the big complaints about ESPPs is that many employees don’t truly become “owners” since they often sell their shares soon after the purchase date. Let me dispel this myth. Most employees actually hold their shares for months or years, unless the stock price is dropping quickly. They become owners of the companies stock and are aligned with the goals of other investors and hear the messages of management with a different perspective.