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Equity compensation is a valuable way for employers to enhance your overall compensation by giving you a stake in the company. Understanding how these plans work is crucial, as they can come in various forms with unique terms and conditions. Common types of equity compensation include stock options, restricted stock awards, and restricted stock units. Stock options grant you the right to buy company stock at a predetermined price, allowing you to benefit from an increase in the stock price. However, the value of your equity compensation can also decrease if the stock price goes down.