Companies that offer unlimited vacations will outperform S&P 500, investors say

Is unlimited paid time off good for a company’s stock price? Most investors think so, according to the latest Markets Live Pulse survey.

Advocates of more flexible working arrangements say the policy allows employers to attract top talent while also helping cut costs associated with compensation for unused vacation.

Perhaps that’s why some 64% of 1,061 MLIV Pulse survey respondents said that companies that offer the option will do better than the S&P 500.

Goldman Sachs made waves last year when it announced it would roll out unlimited PTO to senior staff.

Often associated with Silicon Valley start-ups, the perk is still relatively rare: only about 8% of companies in the U.S. offer it, according to a 2023 survey by the Society for Human Resource Management.

About 12% of MLIV Pulse respondents said their firm has the policy.

The option, also offered by tech companies like Microsoft, Adobe and Netflix, has become more common among employers over the past several years, in part because it sidesteps administrative headaches and slashes costs.

“If I’m the CFO, I’m loving this. This is a big money saver for me,” said Rich Fuerstenberg, senior partner at consulting firm Mercer.

Adoption was accelerated by the pandemic lockdowns, Fuerstenberg said, when employees weren’t able to travel and so balances of unused PTO ballooned – spurring finance departments into action.

The policy is also something of a “Swiss Army Knife” for recruiters, who use it to compete for top talent.

Even so, Fuerstenberg said it’s difficult to say that implementing the policy will lead directly to a performance boost.