at least the federal minimum wage for all hours worked and overtime pay at time and one-half the regular rate of pay for all hours worked over 40 hours in a workweek." Salaries In the United States, the distinction between periodic salaries (which are normally paid regardless of hours worked) and hourly wages (meeting a minimum wage test and providing for overtime) was first codified by the Fair Labor Standards Act of . Five categories were identified as being "exempt" from minimum wage and overtime protections, and therefore salariable—executive, administrative, professional, computer, and outside sales employees. Salary is generally set on a yearly basis. (These employees must be paid on a salary basis above a certain level, $455 per week as o, though some professions – "Outside Sales Employees", teachers and practitioners of law or medicine—are exempt from that requirement.) Executive compensation "Executive compensation" has its own set of regulations and lacks many of the tax benefits of other employee compensation because it exceeds their income limits. Equity compensation Employee stock options Employee stock options are call options on the common stock of a company. Their value increases as the company's stock rises. Employee stock options are mostly offered to management with restrictions on the option (such as vesting and limited transferability), in an attempt to align the holder's interest with those of the business shareholders. Options may also be offered to non-executive level staff, especially by businesses that are not yet profitable, insofar as they may have few other means of compensation. They may also be remuneration for non-employees: suppliers, consultants, lawyers, and promoters for services rendered. There is usually a period before the employee can "vest", i.e. sell or transfer the stock or options. Vesting may be granted all at once ("cliff vesting") or over a period time ("graded vesting"), in which case it may be "uniform" (e.g. 20% of the options vest each year for 5 years) or "non-uniform" (e.g. 20%, 30%, and 50% of the options vest each year for the next three years). Types of employee stock options In the U.S., stock options granted to employees are of two forms, that differ primarily in their tax treatment. They may be either: Incentive stock options (ISOs) Non-qualified stock options (NQSOs or NSOs) Other equity-based compensation Besides stock options, other forms of individual equity compensation include: restricted stock – Stock that cannot be sold by the owner