stock compensation
Stock compensation is when your employer pays you partly in company shares instead of cash alone, so you own a small slice of the business you work for.
In plain English
Tunde got his offer letter from a tech company in Lagos and there was a line he had never seen before, RSU grant, four year vesting. He called his cousin in London who worked at a similar firm and asked, is this real money or paper promises. His cousin laughed and said, both, and neither, depending on how you look at it.
Here is the plain version. Some companies, especially tech startups and multinationals, pay staff partly in shares of the company rather than only in cash. This is stock compensation. Instead of getting all your value in your bank account every month, some of it sits as ownership, a small piece of the business itself.
The shares usually come with a waiting period called vesting. You do not get them all on day one. A common structure is that you earn a quarter of your promised shares each year over four years. Leave after one year and you walk away with only that first slice, the rest stays behind.
This matters because the value can grow or shrink. If the company does well and its share price rises, your stock compensation can end up worth far more than the number on your offer letter. If the company struggles, that same paper value can shrink to almost nothing, even while your salary stays steady.
For a Nigerian professional considering two offers, one all cash and one part cash part shares, the honest question is not which sounds fancier. It is whether you believe in the company enough to have part of your pay tied to its fortunes, and whether your monthly bills can survive on the cash portion alone while the shares do their slow work in the background.
Ada joins a fintech startup on ₦600,000 monthly cash salary plus shares worth ₦2,400,000 vesting over four years. After year one, ₦600,000 worth of those shares becomes hers to keep, whether she stays or goes, and if the company grows, that ₦600,000 slice could be worth much more by the time she can sell it.
Questions people ask
Can I get cash instead of shares if my employer offers stock compensation?
Usually not by choice. The company decides the pay structure, and stock compensation is typically offered alongside your base salary, not as an optional swap. You can negotiate the mix before you sign, but once the offer is set, you rarely get to convert shares to cash on demand.
What happens to my shares if I resign before they finish vesting?
You generally lose whatever has not vested yet. This is why the vesting date matters so much when planning an exit. Some people time their resignation to land just after a vesting date so they do not leave value on the table.
Do I pay tax on stock compensation in Nigeria?
Yes, the value of vested shares is typically treated as part of your income and taxed accordingly, though the exact treatment depends on how the scheme is structured and where the company is registered. It is worth asking your employer's finance team or a tax adviser for the specifics before you assume it is free money.
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