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Equity compensation is an additional way for your employer to enhance your overall compensation by giving you a stake in the company. Your equity compensation increases in value when the company's stock price goes up, but it can also decrease in value. Understanding the terms and conditions of your equity compensation plan is important to make the most of it. Common types of equity compensation plans include stock options, restricted stock awards, and restricted stock units. Stock options grant you the right to purchase company stock at a set price, while restricted stock awards and units are grants of company stock with restrictions on when you can sell them.