Equity compensation means giving employees a stake in your company as part of their pay. Employees receive instruments that gain value as the company does. This can replace or sit alongside higher cash salary. It is standard practice in startups and tech. Senior candidates worldwide increasingly expect it.
Main Types of Equity Compensation
- Stock options: The right to buy shares later at a fixed price
- Restricted Stock Units: A promise of shares once vesting conditions are met
- Employee Stock Purchase Plans: Employees buy shares at a discount through payroll deductions
- Phantom equity: Cash payouts that mirror share value without transferring actual ownership
Most equity vests over time. The typical schedule runs four years, with a cliff after year one. Employees earn their stake by staying.
Why Equity Gets Complicated Across Borders
Each country taxes equity differently. Some tax at grant. Others tax at vesting or exercise, and rates vary widely. Some jurisdictions require securities filings before you can grant equity to local employees at all. Favorable schemes exist, like EMI in the UK or BSPCE in France. They only apply when strict conditions are met. Hiring through an Employer of Record changes the mechanics slightly. Your company grants the equity directly to the worker. The EOR handles any payroll withholding that arises. The plan itself still needs local legal review.
Bottom Line
Equity is a powerful part of total rewards. Treat every new country as a new compliance question before you grant.