Stock Compensation

Stock Compensation

An agreement in which an employee, usually a high-placed executive, receives stock in the company in addition to or instead of cash as salary. If the share price for the company increases, stock compensation can be very profitable for the employee. The idea behind stock compensation is to give the employee a significant stake in the success of the company, which will, in turn, encourage him/her to act in the best interest of shareholders. See also: Qualifying stock option.