Warning: Equity in the form of Options is a liability
Startup companies like to give Equity Incentive Plans in the form of Options. This is the right to purchase a future stock for the low price of the day you joined the company.
It is offered as no risk only reword. No one is forcing you to buy the shares, you simply have the option to do so if the share price in the future is higher than the option pre-fixed price, then you can buy a share for a low price and immediately sell for a higher price, earning the difference.
That's what I thought. But there's a catch, and it can be a huge one.
When you divorce, you have to go through financial equalization which means that you pay your ex spouse more if you own more. Your options now, even though you are hypothetically in a dead end start up that is about to collapse, have some value. An appraiser will make up numbers to fit into Black-Scholes formula and give a value to these options even though you can't sell them because your company is private, not traded and the options may be worthless. You will have to pay your ex based on the predicted value.
So yes, options are a liability, if you accept them, you may end up paying for them even if you don't want to. And they don't tell you that when you sign up for it. So be careful and know what you are getting into.