An Equity Incentive Plan is a tool used by companies to attract and retain top-level executives by providing these executives and directors with an equity interest in the company. An important part of their overall compensation package, these plans contain a mix of company stock and stock options. Companies who offer Equity Incentive Plans feel that tying executive and director pay to the company’s stock price is a good way to motivate the executive to exercise loyalty towards the company and perform their job to the best of his or her abilities.

Let’s say you are a mid-level manager at a medium sized company. If your company provides an Equity Incentive Plan to top-level executives, assuming you have performed well in your duties, you may want to seek inclusion in these plans at your next performance review. While most companies do have to watch costs and cannot include all employees in Equity Incentive Plans, it does benefit the company to include as many employees as possible. These Plans are used to motivate employees to serve loyally to the company. Thus, if you can convince management that you are a desirable employee who has plenty of the other options at other companies, you may be able to persuade management to include you in their potentially lucrative Equity Incentive Plan.

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