We've all heard stories of Silicon Valley superstars who had equity in a company and ended up making millions when the company sold. This article

Equity 101 | Placement Learn

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2021-05-28 22:30:06

We've all heard stories of Silicon Valley superstars who had equity in a company and ended up making millions when the company sold. This article will walk you through what it means to have equity and help you understand how it impacts your overall compensation package.

Fair warning – the topic of equity can get complicated. We are only going to skim the surface here and hopefully equip you with enough functional knowledge. We'll give some additional resources if you want to go deeper at the end.

Below, we'll get into the details of these two types and how you make money from them. But first, we'll talk about vesting.

Regardless of which type of equity you receive from a company, it's likely that there will be a vesting arrangement. This means that you will not receive all of the stock (or options) upfront. Instead, you will receive them over a number of years, and only if you continue to work for the company.

Most equity grants include a time period called a "cliff". If you leave the company before the time period designated by the cliff has passed, you will not receive any equity at all.