You started a business and you want to compensate your early employees. Or you've joined a startup and were offered stock options as part of your compensation. How do those work? Let's do it. Most startups in the US compensate their employees with a salary, of course, and with stock options. The idea here is giving team members an upside if the collaborate to increase the company valuation. On public companies, that is, companies whose stock has been listed on a public stock exchange, this works somewhat differently, so I won't get into that.