Employee Stock Options, Restricted Stock Units, & Employee Stock Purchase Plans Explained!

Equity Compensation Like Employee Stock Options & More Explained!

Getting paid in your company’s stock can be incredibly wealth building, but not enough people are taking advantage of employee stock options and related equity compensation offers! I explain what you need to know.

-Intro to Equity Compensation
-Stock Options Can Be Win Win
-Don’t Confuse These With Options or Derivatives
-One Lululemon Employee’s $1.5 Million Stock Options
-Gender Pay Gap In Stock Options
-Example Stock Option Grant Letter And Agreement
-Equity Compensation Terms Explained
-Stock Options vs Restricted Stock Units
-Stock Options Example
-Minimize Taxes While Maximizing Stock Options Gains
-Restricted Stock Units Example
-Employee Stock Purchase Plans

Equity compensation is also known as stock or share-based compensation and could be in addition to or in lieu of an employee’s salary. It is also commonly referred to as stock options, although “stock options” is one distinct type of equity compensation, and there are a few more.

The main types of equity compensation that a company may choose to offer its employees include:
-Employee Stock Options,
-Restricted Stock Units,
-Employee Stock Purchase Plans (aka Stock Investment Plans)

Please note that equity compensation like employee stock options should not be confused with the types of securities options or derivatives that can be traded through your brokerage account.

Both public and private companies can offer equity compensation to employees in order to motivate them to be personally invested in the success of the company. I think this is a great deal if you’re an employee because you get to be a partial business owner or investor in the company’s stock. You get to benefit when the business generates profits.

Sometimes when private companies start out as startups, they may offer stock options if they cannot pay high salaries to their employees in order to make their overall compensation packages more competitive to attract employee talent. Stock options can be a win win for both employees to be rewarded financially and for employers to increase employee loyalty.

But only 24% of workers have ever exercised their stock options or sold shares they received through equity compensation, which suggests to me that not enough people understand the equity options their company is offering to them.

If you’re interested in learning how to take control of your finances and start becoming an investor like Warren Buffett, check out my free PDF guide.

I look forward to making more investor friends! Add me on Instagram: michellemarki