Employee Ownership - What does it mean?

The term “employee ownership” refers to the ownership stake in the company that employees either receive or will have the opportunity to acquire when they accept equity compensation.

When an employee agrees to receive equity as part of their compensation package, the company pledges to either award them shares or offer the opportunity to purchase shares on favorable terms in the future.

Companies – whether startups or more established entities – will have different reasons for offering equity compensation to prospective or existing employees. Common reasons include seeking to freeing up cash flow in the here and now and using equity as an additional incentive when attempting to attract or retain key individuals.

There are many different types of employee equity compensation available, each with their own distinct set of characteristics. 

Read on to find out more about the different types of equity awards.