West Palm Beach Securities Fraud Lawyer Explains: Equity Compensation is Not Just for CEOs Anymore
Equity compensation, also known as a stock award, is a form of non-cash compensation that represents ownership in a company. If the company does well and the value of its stock goes up, the future value of the stock award could be higher than if the employee was given cash today. Equity compensation is one way for a company to attract or retain talent without having to pay out large salaries.
The popularity of equity compensation for rank-and-file employees, especially among cash-strapped start-up companies, is on the rise. According to a study done in 2010 by the National Center for Employee Ownership, 28 million employees in the U.S. owned stock or stock options in their companies. The most common types of equity compensation are stock options and restricted stock units (RSUs).