An equity incentive plan is a formally drafted document which contains the details of a plan which the owners of a company have devised for their employees through which the employees can be provided with equity in an easier manner. These plans are made by almost all large companies in which number of employees working is huge.
Companies can provide their employees with equity in several possible ways. The first method is to provide equity outright in which equity is provided directly. In the second method, the company can provide its employees with vested equity. The third method by which a company can grant its employees equity is by providing them with vested equity options.
The reason why equity incentive plans are useful for companies is because providing equity options increases the morale and confidence of employees which results in better performance and hence the betterment of the company and its reputation.
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Sample Equity Incentive Plan Agreement
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