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Paydays are just one aspect of compensation; equity compensation can enhance overall earnings by giving employees a stake in the company. When the company's stock price rises, equity compensation becomes more valuable, but it can also decrease if the stock price falls. Understanding how equity compensation plans work is essential, as they come in various forms with distinct terms and conditions. Common types include stock options, which provide the right to purchase shares of the company's stock; restricted stock awards; and restricted stock units. Knowing the specifics of these plans can help employees maximize their benefits.