What is Equity Compensation?
Equity compensation is non-cash form of employee pay that represents ownership in the company, and it allows the employees to share in the growth of the company and/or the profits. This type of compensation can take many forms, including options, restricted stock, and performance shares. Many startup companies will use this as a form of compensation to keep employee costs low while they grow. This kind of compensation is also used by companies that are looking to help build retention.
Common types of equity compensation:
- Non-qualified stock options
- Incentive stock options
- Restricted stock
- Performance shares