A key difference between cash-settled and equity-settled transactions lies in how the obligations under the awards are fulfilled. In the case of cash-settled transactions, the recipient is typically paid a cash amount based on the value of the equity instrument that the award is based on (such as the fair value of a share). On the other hand, in equity-settled transactions, the recipient receives actual shares of the company's stock upon vesting. The primary distinction here is that in cash-settled arrangements, there is no dilution of the company's equity because no shares are issued, whereas in equity-settled schemes, the company's equity is indeed diluted due to the issuance of actual shares.