Equity Compensation (Stock Options, RSUs)

Definition

Payment method where employees receive company ownership stakes through options or restricted stock units, supposedly creating alignment but often diluting over time.

Example Usage

The offer includes a base salary of $120K, bonus potential of $25K, and $40K in annual RSU grants vesting over four years.

Origin

Practice emerging in the 1980s, popularized by tech startups in the 1990s.

Fun Fact

Equity is a great motivator until the company IPOs at $5 per share and then plummets to $2, at which point employees realize they're just working for free.

Source: Compensation terminology

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