When you think about your benefits package as an employee, you might think about health insurance, 401k, or paid time off. But some employers offer an additional benefit to their employees in the form of equity in the company.
Many companies — particularly startups or scale-ups — will offer stock options as part of your overall compensation package to recruit and retain top talent. The idea behind offering company equity is that you will essentially share in the company’s success, and will have the potential to sell your shares one day for a little (or a lot of) money.
For public companies (i.e., those trading on the stock exchange), equity is typically offered to employees in the form of a discount on their stock. Private companies are owned by a group of individuals, like the company’s founders and/or private investors, and the stock can’t be traded publicly.
For this article, we’ll focus primarily on private companies and what to expect when you’re granted stock options as an employee.
