Employee equity is the ownership stake granted to non-founder employees in a startup, typically via stock options or restricted stock units (RSUs). Stock options are most common at early-stage companies; RSUs become more common at late-stage and post-IPO companies. Employee equity is used as a recruiting and retention tool to align employees with company success and to compensate for the below-market cash compensation common at venture-backed companies. The equity comes from the option pool established at financing rounds, vests over a 4-year schedule (typically with a 1-year cliff), and produces significant upside potential if the company succeeds (and zero outcome if it doesn't), along with corresponding complexity for emp...