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Equity compensation is an additional way for your employer to enhance your overall compensation by providing you with a stake in the company. This can lead to a greater payoff if the company's stock price increases, but also carries the risk of a decrease in value if the stock price goes down. It is essential to understand how equity compensation plans work, as each plan has unique terms and conditions that can impact your benefits. Common types of plans include stock options, restricted stock awards, and restricted stock units.