A startup founder accepting some compensation in company stock is receiving which form?

A startup founder accepting some compensation in company stock is receiving which form?

• A. Salary
• B. Equity
• C. Hourly
• D. Bonus

Answer: (B)

When a founder accepts compensation in company stock, they’re receiving equity—an ownership stake in the business. Equity is typically granted as stock or stock options that vest over time, tying the founder’s rewards to the company’s long-term value. This approach is common in startups because it preserves cash while aligning incentives: as the company grows, the value of the equity increases. In contrast, salary and hourly pay are cash payments fixed by time or rate, and a bonus is usually a cash incentive based on performance. So the form described is equity, representing ownership rather than immediate cash.

When a founder accepts compensation in company stock, they’re receiving equity—an ownership stake in the business. Equity is typically granted as stock or stock options that vest over time, tying the founder’s rewards to the company’s long-term value. This approach is common in startups because it preserves cash while aligning incentives: as the company grows, the value of the equity increases. In contrast, salary and hourly pay are cash payments fixed by time or rate, and a bonus is usually a cash incentive based on performance. So the form described is equity, representing ownership rather than immediate cash.