I’m applying for a position, and as part of the compensation package, they list equity at 0.01% as one of the benefits. What does this mean?
Equity is your part in ownership of the company. If the equity package is listed as 0.01%, then you would own that much of the company. This would typically be issued out as stock shares in the company. Let’s say there are 1 million shares of the stock available. At 0.01%, you would now own 100 shares of the company. If each share is worth $10, now you own $1,000 worth of the company. This gives start up employees a better incentive to help the company grow. If the company grows in value, your share of the company becomes worth much more. If the company ends up failing, your shares are going to be worth nothing. In other words, equity helps start up employees have a more vested interest in the company’s success.
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