Updated October 9, 2026. Equity compensation is pay in the form of company ownership or a right to ownership. In 2026 the common forms are still:
- Restricted stock units. Shares delivered after vesting. Taxed as ordinary income at vesting on the value of the shares, unless you have a valid 83(b) situation, which RSUs usually do not allow.
- Restricted stock. Shares issued now, subject to forfeiture. An 83(b) election, filed within 30 days of the grant, taxes the value at grant instead of at vesting.
- Stock options. Nonqualified or incentive, taxed as described on the option pages of this site.
- Employee stock purchase plans. A discount under a qualified Section 423 plan can get capital-gain treatment if you meet the holding periods. The discount is often 15%.
A grant is not cash. Private-company shares can be illiquid until a tender, a sale, or an IPO. Public-company shares can be sold after vesting, subject to blackout windows. Read the grant agreement for the vesting schedule and what happens if you quit.