Working for a Startup: How Well Do You Know Your Employee Stock Options?

Imagine you've been recruited to get in on the ground floor at a successful startup company. Instead of getting a big paycheck, a large portion of your compensation will come in the form of stock options. It's one way to reward you for the time you're willing to put in to help build the company. You're essentially contributing your sweat equity and betting that your company's future is bright and that you'll go along for ride.

Maybe you believe there could be an IPO sometime down the road. An initial public offering is a one-time event that could instantly turn you into a millionaire. But it's also likely you'll join the company and then wait several years before the company decides to go public -- if ever. That's because more fast-growing private companies.