The 4 types of employee equity are:
Incentive stock options (ISO) Incentive stock options (ISOs) are a type of common stock that can only be granted to employees through an employee stock option agreement. ISOs must be vested and purchased in order for an employee to own the shares. ISOs are commonly used by companies such as tech startups because they have better tax benefits to employees.
Non qualified stock options (NSOs) Non qualified stock options (NSOs) are a type of common stock granted to employees through an employee stock option agreement. NSOs can be granted to anyone, regardless of citizenship or residency status.NSOs must be vested and purchased in order for an employee to own the shares. NSOs are taxed as ordinary income when they are exercised, and may also be subject to payroll taxes. They do not receive favorable tax treatment.
Restricted stock awards Restricted stock awards (RSAs) are a type of common stock granted to employees through an employee stock option agreement. They are unlike ISOs and NSOs in that they do not have to be purchased, they just have to be vested. While they do not have to be purchased, RSAs are not commonly used because they have heavy tax implications.
Restricted stock units (RSUs) Restricted stock units (RSUs) are a type of equity compensation that is generally granted to executives and key employees. RSUs are similar to RSAs in that they must be vested and are owned once vested. RSUs are generally used by late stage startups and public companies.