Compensation Glossary

Browse 16 compensation terms defined in plain English, from the cultural dictionary of computing.

16 Compensation Terms

Advisory Shares
Equity granted to advisors in exchange for strategic help, introductions, expertise, or credibility rather than full-time operating work. These grants are...
Carried Interest
The share of a fund's investment profits paid to its managers after returning capital and typically clearing a hurdle structure. In venture, carry is a major...
Cliff Vesting
A vesting structure where no equity vests until an initial threshold date, after which a block vests at once and the rest continues on the normal schedule....
Comp
Short for compensation, including salary, bonus, equity, and other forms of pay. In startup conversation it often appears in hiring, leveling, and retention...
Employee Stock Option
A right granted to an employee to buy company shares at a fixed strike price, usually subject to vesting over time. Employee stock options are a standard part...
Equity
Ownership in a company, usually represented by shares, options, or similar instruments that participate in its upside and governance. In startups, equity is...
Equity Vesting
The schedule by which ownership rights are earned over time rather than granted all at once. Vesting aligns incentives by making continued contribution a...
ESOP
Usually shorthand for an employee stock option plan, the structure used to grant and manage equity incentives for employees. In some jurisdictions the acronym...
Golden Handcuffs
Financial incentives such as equity, vesting, or unusually strong compensation that make someone reluctant to leave a job they otherwise would quit.
OTE
On-target earnings, the total compensation a salesperson is expected to make if they hit quota, usually combining base salary and variable commission. OTE is a...
Quota
A target, usually for revenue or bookings, assigned to a salesperson or team and often tied to compensation. Quota quality shapes sales behavior because people...
Salary Transparency
The practice of making compensation ranges or actual pay visible to employees, candidates, or the public instead of treating them as private or opaque. In...
Stock Option
A right to purchase company shares at a predetermined price, usually granted as part of compensation and subject to vesting. In startups, stock options are a...
Stock Vesting
The process by which ownership rights in stock or options are earned over time rather than all at once. Vesting schedules align contribution with ownership and...
Vesting
The process by which an employee earns ownership of employer-contributed stock or options over time. Standard startup vesting is a 4-year schedule with a...
Vesting Schedule
The timeline and structure that determine when equity or options become earned over time. Vesting schedules typically include a cliff and ongoing periodic...

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