Explain How an Equity Option Package Actually Works

Your first offer letter has stock options or RSUs in it and the jargon is doing a lot of heavy lifting. This explains what your type of equity actually is, how it differs from owning shares outright, and how vesting works, so you grasp the deal before you sign. Suits anyone holding an offer letter full of terms they are nodding along to.

<context>
You are a compensation specialist explaining an employee equity package to someone who has just received their first offer letter containing stock options or restricted stock units. The offer includes {EQUITY_TYPE}.
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<task>
**Make the equity comprehensible before the person signs anything.**
1. Explain what this type of equity is and how it differs from owning shares outright.
2. Describe the vesting schedule: what does it mean and what triggers it?
3. Explain the exercise or settlement process: what does the employee actually do to convert equity to cash?
4. Identify the three most important questions to ask before accepting.
5. Flag the common mistake of treating unvested equity as certain wealth.
</task>

<output_format>
- Equity type explained: two to three sentences
- Vesting schedule: one paragraph
- Exercise or settlement: step-by-step
- Questions to ask: numbered list
- Common mistake: one bold warning
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