Reading and Comparing an Offer
An offer is not a salary, it is a package with several conditional parts, and comparing two of them means resolving each into one annual number first. The parts most likely to mislead are equity, which is conditional on staying and on a share price, and bonus at target, which is a plan rather than an outcome.
Two offers arrive. One has a higher base, the other a larger equity grant and a better retirement match. There is no way to compare them by looking, and most people try anyway.
Resolve each offer into one number first
Base, bonus at target, equity divided by its vesting period, the retirement match as a percentage of base, employer-paid insurance, and paid time off priced at your own daily rate. That is six lines and it produces a figure you can actually set against another figure.
Doing it separately for each offer, before comparing anything, is the whole technique.
What is certain and what is conditional
Base is the only part that is not contingent on something happening. Bonus depends on performance and on the company's year. Equity depends on a share price and on staying long enough to vest. A package weighted toward the conditional parts is transferring risk from the employer to you, which can be a good trade and should be a deliberate one.
The questions that come before the arithmetic
What did people in this role actually earn last year. What proportion of the team hits the bonus target. What is the vesting schedule and is there a cliff. Is the equity in something with a market price. An offer you cannot answer those about is one you cannot value.
Employment type changes everything
A contract rate and a salary are not comparable without adjusting for benefits, employer taxes, unpaid time off and the absence of notice. The headline gap between them almost always overstates the real one.
Articles in this section
- How to Value a Job Offer as One Number 2 min read
- Two Offers, Different Structures: Building a Fair Comparison 2 min read
- What to Ask Before You Can Evaluate an Offer at All 2 min read
- Signing Bonuses and the Strings Attached to Them 2 min read
- The Offer Deadline: How Much Time You Can Actually Take 1 min read
- Reading an Offer Letter for What It Does Not Say 2 min read
- Verbal Offers, Written Offers, and What Actually Binds 2 min read
- Comparing a Startup Offer to an Established Employer’s 2 min read
- Contract, Contract-to-Hire and W-2: Comparing Across Employment Types 2 min read
- When to Walk Away From an Offer on Pay Alone 2 min read
Common questions
How do I compare two offers with different structures?
Resolve each into one annual number first u2014 base, bonus at target, equity over its vesting period, retirement match, insurance value and paid time off u2014 then compare the totals.
How should I value equity?
Divide the grant by the vesting period for an annual figure, and treat it as conditional on both a share price and on staying long enough. If there is no market price, treat the value as genuinely unknown.
Should I use bonus at target or at maximum?
At target, and better still at what was actually paid last year. A maximum nobody has hit is a plan, not compensation.
Why does base matter if the package is bigger?
Because it is the only certain part and because other things are calculated from it u2014 the bonus, the match, the next raise, and often severance and what a lender will lend.
Can I compare a contract rate to a salary directly?
No. Adjust for benefits, employer taxes, unpaid leave and the absence of notice first. The headline gap almost always overstates the real one.
What single question is most revealing?
What did people in this role actually earn last year. An employer that will answer it is telling you something, and one that will not is telling you something too.
Negotiating a Salary Offer
Once you can value an offer, the next question is how to move it.
Read it →