Equity compensation, also known as stock-based compensation or equity incentives, refers to a form of employee remuneration that grants ownership stakes, such as stock options, restricted stock units (RSUs), or shares, in the company as part of their compensation package. Equity compensation aligns employees' interests with shareholders' interests, incentivizes performance and retention, and helps attract and retain top talent. Employees may receive equity compensation as part of their compensation package, performance bonuses, or long-term incentive plans. While equity compensation offers potential financial rewards, it also exposes employees to risks related to stock price fluctuations, vesting schedules, and tax implications. Employers must carefully design and administer equity compensation programs to balance the interests of stakeholders and mitigate potential conflicts of interest.