What are the different types of equity compensation?

What are the different types of equity compensation?

There are several types of equity compensation, including stock options, restricted stock units (RSUs), and employee stock purchase plans (ESPPs). Would you like to know more about any specific type?

Can you explain stock options?

Sure! Stock options give employees the right to purchase company stock at a predetermined price, known as the exercise price, after a certain period. This can be beneficial if the company's stock price increases.

What are restricted stock units?

Restricted Stock Units (RSUs) are company shares granted to employees as part of their compensation, but they are subject to vesting conditions. Once vested, employees own the shares outright.

How do employee stock purchase plans work?

Employee Stock Purchase Plans (ESPPs) allow employees to buy company stock at a discount, often through payroll deductions over a set offering period. It's a great way to invest in the company!

What are the tax implications of these compensation types?

The tax implications vary by type. For stock options, taxes are due when exercised. RSUs are taxed as income when they vest, and ESPPs may have different tax treatments based on the holding period. It's best to consult a tax advisor for specifics.