Ways you can get equity
Having an equity gives you bragging rights when you tell your friends that you’re part-owner of a successful business - it’s much better than being able to say you’re a part-owner of a lemonade stand 🤓
But, on a serious note, why are companies eager to give equity to their employees?
- They're broke and they still want best talent to work for them
- Employees will be motivated to work harder to increase the value of their equity
- It's a great way to retain talent - having a stake means they'll be more likely to stay around longer
Before starting, let's get the basics right and understand what is Employee equity. It is a form of non-cash compensation that provides a share of the company's ownership 😱
Here are 4 ways you can acquire equity as an employee
ESOPs a.k.a Employee Stock OPtions
ESOPs allows employees to purchase company stock at a pre-determined price and time at a discounted rate.
For simplicity, if you work for Zomato, as an employee you can buy its stocks 1 year from now at a price (exercise price) discounted from then market value *Drools in Instant Profits 🤤*
ESPP a.k.a Employee Stock Purchase Plan
This is an investment plan that allows employees to purchase their stocks at a discounted price, normally 5-15%. It's like an SIP but with predictable gains 🤑
Reach out to your HR to see if they have a ESPP that you can enroll yourself into.
SAR a.k.a Stock Appreciation Rights
SAR allows you to receive the increase in value of company's stock over a set period of time. This means that the employee doesn't directly own the share, but can own the profits coming out of the increase in price 🤩
RSU a.k.a Restricted Stock Unit
This is legit free money. No kidding. RSU are stocks that company award you over a period of time for staying with them. You do not have to buy them 🙀
There's a whole list of people who have become millionaires by working in a company. Now, the million dollar question - How can you find the companies that provide equity?
Right here on Wellfound
To conclude, equity gives you a chance to be an official “silent partner” in the business, so you can coast on the success of the company without actually putting in the hard work (lol)