What are equity compensation structures?

What are equity compensation structures?

Equity compensation structures are methods companies use to provide employees with ownership stakes, often through stock options or restricted stock.

How do stock options work in these structures?

Stock options give employees the right to purchase company shares at a predetermined price, usually after a vesting period.

What are the benefits of equity compensation for employees?

Benefits include potential financial gain, alignment with company performance, and increased job satisfaction.

Are there any risks associated with equity compensation?

Yes, risks include stock price volatility and the possibility of options expiring worthless if the stock doesn't perform well.

How can companies design effective equity compensation plans?

Companies should consider their goals, employee demographics, and market trends to create competitive and motivating equity plans.