Advisory shares, also known as advisor shares, are a type of equity compensation given to company advisors in lieu of or in addition to cash compensation. They are typically financial rewards in the form of stock options. Advisors who receive advisory shares are usually businesspeople with previous experience as company founders or senior executives. They exchange their insight and contacts for equity in a young company. Advisory shares are often used as incentives for advisors to invest in a company’s long-term success.

Advisory shares come in two main types: restricted stock awards (RSAs) and stock options. RSAs are shares bought upfront, and options are the right to buy shares, which are usually delivered later on. Advisory shares are usually subject to vesting for the duration of the working relationship, which encourages advisors to stay with the company for longer.

Advisory shares are not the same as regular shares, which are common stock units bought and sold on public markets like the New York Stock Exchange or NASDAQ and are available to all retail investors. Advisory shares do not come with voting rights or a stake in the companys profits. Instead, they grant the holder the right to provide advice and guidance to the companys management team.

Advisory shares are often used by startups to compensate advisors, consultants, and other experts who provide valuable insights and guidance to a startup, typically in the early stages of growth. The amount of equity given to advisors varies depending on the company and the advisors level of involvement.