Equity based programs is a sophisticated type of indirect compensation. Equity based programs are customarily used in the small business world due to ownership issues. It transfers ownership of the business to an employee based on personal and company performance.
In poker, deuces are often called the wild card. You can use the card as a ‘Two’ or as any other card in the deck. In effect, you can convert the card to something else. Well, convertible debt uses the same principle in business. The holder of the convertible instrument has a choice, continue to collect interest as a debt instrument or convert the debt to equity.
There are two different forms of compensation provided to employees; direct and indirect. Direct forms of compensation have a multitude of types or methods, from salaries to bonuses. Indirect compensation is primarily the various types of benefits and long term incentives. This article is an introduction to the terminology of compensation.
One of the forms of compensation is direct remuneration for services rendered by the employee. The term used for this is wages. It consists of four different groups of payment from the employer to the employee. They are salary, hourly, commission and bonus types of wages.
