A startup employee agrees to receive some of their pay in company stock. Which form of compensation is this?

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Multiple Choice

A startup employee agrees to receive some of their pay in company stock. Which form of compensation is this?

Explanation:
Receiving pay in the form of company stock is equity compensation. It means part of your pay is an ownership stake in the company rather than cash. In startups, this approach helps conserve cash and also aligns your interests with the company’s success, since the value of the stock can grow if the company performs well. Equity can come as stock grants or stock options and usually vests over time. It differs from a salary or hourly wage, which are cash payments tied to time worked, and from a commission, which is variable pay tied to specific performance like sales.

Receiving pay in the form of company stock is equity compensation. It means part of your pay is an ownership stake in the company rather than cash. In startups, this approach helps conserve cash and also aligns your interests with the company’s success, since the value of the stock can grow if the company performs well. Equity can come as stock grants or stock options and usually vests over time. It differs from a salary or hourly wage, which are cash payments tied to time worked, and from a commission, which is variable pay tied to specific performance like sales.

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