What is the difference between equity compensation and salary?

What is the difference between equity compensation and salary?

Equity compensation refers to non-cash pay that represents ownership in the company, like stock options, while salary is a fixed cash payment for work.

Which one is better for employees?

It depends on individual circumstances. Equity can offer long-term benefits if the company grows, while salary provides immediate financial stability.

What are the risks of equity compensation?

The main risks include market volatility, potential loss if the company underperforms, and the possibility of dilution if more shares are issued.

Can I negotiate my equity compensation?

Yes, you can negotiate equity compensation, just like salary. It's important to understand the company's valuation and growth potential.

How do taxes work for equity compensation?

Taxes on equity compensation can be complex. Generally, you may owe taxes when you exercise options or sell shares, depending on the type of equity.