• Stock compensation is a way in which corporations use stocks or stock options to reward employees instead of cash.

  • Equity compensation is often subject to a vesting period before it can be collected and sold by an employee.
  • Vesting periods are often three to four years, typically starting on the first anniversary of the date the employee became eligible for share compensation.
  • The two types of share awards are non-qualifying share options (NSO) and incentive share options (ISO).
  • Some companies reward managers and top managers with shares for performance while meeting certain performance metrics such as earnings per share (EPS) or return on equity (ROE).