Step 1: Essence.
Sweat equity compensates employees/directors for “sweat”—special efforts, intellectual property, or value additions.
Step 2: Key features.
- Issued to employees/directors only.
- Often at a discount or for non-cash consideration.
- Locks in talent, aligns interests with long-term growth.
Final Answer:
\[
\boxed{\text{Equity issued to employees/directors for value addition, usually at a discount}}
\]
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