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Equity compensation is a way for employers to enhance overall compensation by providing employees with a stake in the company. When the company's stock price increases, the value of equity compensation also rises. However, stock prices can also decrease, leading to a decrease in the value of equity compensation. It is crucial to understand the terms and conditions of an equity compensation plan to maximize its benefits. Common types of equity compensation plans include stock options, restricted stock awards, and restricted stock units. Each plan has its own unique features and it is important to be familiar with them to make the most of the plan.