From Los Angeles Business Journal · Demi Ajayi · · 50s
LABJ Stock Index: October 19
Private company compensation types explained by J.P. Morgan.
In brief
Private company compensation types explained by J.P. Morgan. Private company employees learn about four key equity compensation types before an IPO. Originally reported by Los Angeles Business Journal.
Quick answers
- What are equity compensation types?
- Private companies often use equity compensation for employees before going public.
- What is the key takeaway from LABJ Stock Index: October 19?
- Private company employees learn about four key equity compensation types before an IPO.
What are equity compensation types?
Private companies often use equity compensation for employees before going public.
Non-qualified stock options (NQSOs)
NQSOs let employees buy shares at a fixed price when the stock price rises above that price.
Incentive stock options (ISOs)
ISOs do not create ordinary income at exercise but may be taxed as long-term capital gains later.
Restricted stock units (RSUs)
RSUs are shares promised to employees after a set time or liquidity event like an IPO.
Performance stock units (PSUs)
PSUs require both time and company performance metrics to vest before an IPO.
The essence
Private company employees learn about four key equity compensation types before an IPO.
