Sweat equity is a term used to describe the contribution made to a project by people who contribute their time and effort. It can be contrasted with financial equity which is the money contributed towards the project. It is used to refer to a form of compensation by businesses to their owners or employees. The term is sometimes used in partnership agreements where one or more of the partners contributes no financial capital. In the case of a startup company, employees might, upon incorporation, receive stock or stock options in return for working for below-market salaries
Employee ownership occurs when a business is owned in whole or in part by its employees. Employees are often given a share of the business after a certain length of employment or they can buy shares at any time. They also often have boards of directors elected directly by the employees. Some corporations make formal arrangements for employee participation, called employee stock ownership plans (ESOPs).
CAclubindia
