Compensation in which employees are attracted and retained to a startup firm. Since most companies lack the initial funds to get best employees, firms use this compensation to fulfill the need. It is a non-cash compensation representing a form of ownership interest in a firm. Companies offering this compensation give employees stock options with the right to acquire shares of its stocks at a predetermined price called exercise price. The right vests with time, so employees have control of the option after working for the firm for a specific time period. Once the option vests, the employees can either sell or transfer the option.