Equity Compensation Plan
Definition
A formally adopted plan under which a company grants options, restricted shares, restricted share units, or other equity-linked instruments to employees, advisors, and other service providers. The plan must be adopted by the board or equivalent governing body and must document the total number of shares authorised for issuance under the plan.
Common Misapplication
The most common misapplication is making equity commitments verbally or via email without a formally adopted plan document. Verbal or informal equity commitments are not grants under this Standard, do not appear in the cap table, and create legal uncertainty that surfaces in funding round due diligence.
FFI Standard Reference
This term is defined and applied in Book 3, Section 3.3: The Equity Compensation Standard.
Related Terms
Citable URL
This term may be cited using the following permanent URL.
Full citation format: Founder Financial Infrastructure Standard, Beta v0.5, Glossary: Equity Compensation Plan. https://ffistandard.org/glossary/equity-compensation-plan/. 2026.