Total compensation: everything past base salary
Total compensation is base plus everything else that has a market value. Comparing offers on base alone throws away a third of the picture, and comparing on a headline total is nearly as misleading, because the components carry very different risk.
The components, in order of certainty
- Base. Cash, certain, and the only part that raises overtime, match percentages and future raises that are calculated as a percentage.
- Bonus. Split into formulaic and discretionary. Ask the historical payout percentage for the last three years, not the target.
- Retirement match. Certain if you defer enough to get it. Value it at face and confirm vesting; an unvested match is a retention instrument, not pay.
- Health, dental, vision. Value the employer's premium share, and subtract the deductible difference between plans.
- Leave. Convert to cash at your daily rate. Ten extra days is worth four per cent of salary.
- Equity. Apply a discount for risk and for the exercise cost.
- Perks with a market price. Transit, parking, meals, phone, training budget, relocation. Add them only where you would otherwise pay.
Discounting equity honestly
| Instrument | Discount from face | Why |
|---|---|---|
| Public RSU, vesting quarterly | 10 to 20 per cent | Price moves, and vesting schedules to the future |
| Public option, strike near price | 30 per cent plus | Exercise cost and a strike to clear |
| Private RSU, late stage | 40 to 60 per cent | No market, preferred stack ahead of you |
| Private early option | 60 to 80 per cent | Dilution, preference and a long illiquid hold |
Also check the strike price, the exercise window after leaving, whether the company can repurchase, and whether a 409A valuation is current. An option you cannot afford to exercise on leaving is not worth the headline.
What is really taxable
Cash and RSUs are taxed as ordinary income. A match is pre-tax income to you and reduces your taxable wages until withdrawal. Health premiums paid by the employer are excluded. Equity is subject to FICA and income tax at vest or exercise, which means a $50,000 vest is not $50,000 in hand.
Do the comparison on one page
List both offers with each line, apply the discounts, convert leave and perks to cash, then compare the two annual totals and the two first-year totals separately. If the numbers are close, choose on the base salary, because that is the figure every future raise and percentage is calculated against.