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Equity Compensation Plan Template

Equity Compensation Plan Template

An Equity Compensation Plan is a legal agreement that allows companies to provide selected equity-based incentives such as stock options, restricted stock units (RSUs) and phantom equity to eligible directors, officers, employees, consultants, advisors or independent contractors. As outlined in Section 3 of the plan, the company determines which types of awards to offer. This approach helps attract and retain talent while allowing recipients to share in the company’s long-term growth.

Originally published by luminpdf.com

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Equity Compensation Plan for granting stock options, RSUs and ownership to employees and advisors

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Frequently asked questions

An Equity Compensation Plan is a structured legal program that gives a company the flexibility to grant equity-based awards to its employees. These may include stock option plans, restricted stock units (RSUs) or phantom equity. Section 3 of the plan specifies that the company has the authority to decide which types of incentives will be granted. Equity awards may vest over time or upon achieving certain goals and the plan usually includes terms related to vesting, taxation, transferability and termination.
Companies, especially startups and high-growth businesses, implement equity compensation plans to offer non-cash incentives to employees, directors, consultants and service providers.
After approval, the Equity Compensation Plan is signed and stored by the company’s HR or legal team. If equity is issued, required documents may also be filed with regulators based on applicable securities laws.

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