At one time, a major difference between dot-com and traditional companies was the pay. Traditional companies spent cash on salaries and benefits, while dot-coms counted on the power of stock options to attract employees. Interestingly, dot-coms and traditional companies have influenced each other's compensation packages, bringing the two camps close together. The differences come in how the compensation is paid. Entry-level workers will find compensation based on their skills roughly equal at either type of company.
Stock options give an employee the right to purchase stock at some predefined cost.
They are typically granted by a company over a number of years, typically three to five, called the vesting period. Companies offer them to employees for two reasons. One is that they give employees an incentive to work hard, because the better the company performs, the more the options are worth. The other is that they help the company attract quality workers while conserving its cash. Stock options are more widely available among dot-coms than traditional companies, which offer less reward in the future because there is less risk of the company going out of business in the present.