INSIGHTS AND RESOURCES
How well do you understand your equity compensation options?
Learn how different equity compensation plans meet different needs
INSIGHT ARTICLE |
Authored by RSM US LLP
Updated July 2021 (originally drafted February 1, 2017)
Equity compensation includes various methods of compensating employees with payments tied to equity value. Because it ties compensation to the value of the company, it can be a great tool for incentivizing employees. The methods may vary by employee, company or both. If your company is beginning to explore compensation methods outside of standard salaries and bonuses, you need to understand the equity compensation options available and the circumstances in which they are most beneficial.
The most commonly used equity compensation options include:
- Phantom stock
- Stock appreciation rights
- Company stock
- Restricted stock
- Incentive stock options
- Nonqualified stock options
- Stock bonus and employee stock purchase plans
Employers at various stages of a business life cycle may benefit from adding equity compensation plans. Various equity compensation methods can provide great incentives to both the employees receiving them and the employer providing them through increased engagement that can boost company performance. The particular type of equity compensation that will fit a given situation will vary depending on the employer’s goals and the applicable facts and circumstances. Careful consideration should be given to choosing the appropriate type of compensation and complying with any applicable rules so that both parties can appropriately benefit.
Call us at +1 213.873.1700, email us at firstname.lastname@example.org or fill out the form below and we'll contact you to discuss your specific situation.
This article was written by Anne Bushman and originally appeared on 2021-08-02.
2021 RSM US LLP. All rights reserved.
The information contained herein is general in nature and based on authorities that are subject to change. RSM US LLP guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. RSM US LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein. This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer.
RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each is separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/about us for more information regarding RSM US LLP and RSM International. The RSM logo is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.
Vasquez & Company LLP is a proud member of the RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.
Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise and technical resources.
For more information on how Vasquez & Company LLP can assist you, please call +1 213.873.1700.
Subscribe to receive important updates from our Insights and Resources.