What is Equity / Stock Options?
Ownership shares or options to buy shares in your employer's company.
Understanding Equity / Stock Options
Equity compensation gives employees ownership stake in the company, usually through stock options (the right to buy shares at a set price) or restricted stock units (actual shares given over time). This aligns employee interests with company success.
Equity is particularly common at startups where it may comprise a significant portion of total compensation. Understanding vesting schedules, strike prices, and tax implications is crucial when evaluating equity offers.
Key Takeaways
- 1Ownership stake in the company
- 2Value depends on company performance
- 3Usually vests over 4 years
- 4Can be complex—understand the terms
Interview Questions
When a job mentions equity / stock options, ask these to clarify:
- 1“What's the vesting schedule for equity?”
- 2“What's the current 409A valuation?”
- 3“Are there any accelerated vesting provisions?”
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