Our Guide To Employee Equity Compensation Plans

Getting a competitive salary is important, but prospective employees should look at their employer’s benefits package as part of their compensation.

We look at various types of equity compensation that can be meaningfully additive to your net worth while boosting your motivation and confidence at work. We will explain the four most common equity compensation plans.

How The Employee Equity Compensation Plan Varies: – Who is a closely-held private company or a public company represented by the shares? – What: stocks, options, cash, or a combination. – Understand the specifics: grant dates, prices, expiration dates, and vesting periods. – Taxation: Tax consequences may be tricky, requiring you to consult with a tax expert.

1.

Employee Stock Ownership Plan or ESOP

An ESOP is a stock benefit plan and is among the most common forms of employee ownership. This plan covers 14.2 million people working predominantly for privately held companies.

2.

Employee Stock Purchase Plan or ESPPs

For many, remote working provides a better work/life balance. By avoiding a potentially long and irritating commute to work, you can start your day earlier. You can work at your own pace, provided it coincides with the job’s priorities

3.

Restricted Stock Units (RSUs)

Restricted Stock Units or RSU’s have been around for decades. Private or public companies may offer this popular form of employee compensation.

4.

Employee Stock Options (ESOs)

Many employers grant stock options to attract and retain select employees, particularly in start-ups or fast-growing companies. If you are among those employees at the company’s early formation, you may be in an enviable position to benefit from a potential public offering.

Increasingly, an equity compensation plan is a valuable part of your company’s benefits. Prospective employees often seek an equity compensation plan as an incentive to work at the company.

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