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In startups, early employees are often compensated with a salary and stock options, allowing them to benefit from the company's growth. Stock options provide the potential for employees to share in the increased valuation of the company. This summary focuses on private startups, where shares are owned by founders and selected investors, rather than public companies. Compensation begins with a stock option pool, which consists of shares reserved for employees. This pool is established through a legal document approved by the Board of Directors, representing a new issuance of company shares.