Good Financial Reads: Your Guide to Equity Compensation

Equity as a form of employee compensation is becoming more and more common, and not just in the tech industry. However, many employees have a hard time understanding the value of that compensation and how that should fit within their financial plans. When they finally have an opportunity to cash out, they may not know what to do with the proceeds, they may find that the amount they will take home is much less than they expected, and run the risk of making investment mistakes. Here are some principles to help you decide how to allocate the proceeds from selling your equity shares. While we don’t discuss option strategies here, knowing what to do with the proceedings is important in helping you decide when and if to exercise your options or sell your shares.

“Pay me in equity”. It’s a phrase worth adopting, because it is one of the ways that you, as a professional working in technology, communications, finance, healthcare or other booming industries, can materialize your wealth. It’s a phrase that some of the most influential people tout - so much so, that Beyoncé made a t-shirt with this very statement. 

If you are looking into a job that offers equity compensation on some level, you want to make sure that you are getting the best arrangement possible.

It's also important to understand how this form of income is taxed compared to standard salaries.

Read on to learn more about this process and how it will affect your taxes.

Stock options are a type of equity compensation, or a way for employers to reward key employees beyond the usual paycheck.

Equity comp can allow you to participate in the growth and upside potential of the company you work for, and is often a great tool to leverage to accelerate your progress toward building wealth.