Offer Comparison

Comparing two offers on total compensation

Base salary is the number people compare, and it is the one most likely to mislead. Bonus, pension match, equity and the cost of getting to work routinely swing the answer by more than the difference in base.

How it works

• Adds every recurring component: base, target bonus, employer pension contribution, annualised equity.
• Subtracts the costs of taking the job, principally commuting.
• Puts both offers on the same annual basis, so a lower base with better everything else is visible for what it is.

total = base + bonus + employer pension + equity per year
net   = total − commuting and job-specific costs

equity per year = grant value ÷ vesting years
bonus = base × target percentage

Worked example

Offer A: 90,000 base, 10% bonus, 5% pension, office-based with an 8,675 commute. Offer B: 85,000 base, 15% bonus, 8% pension, 40,000 equity over four years, fully remote.

1. A: bonus 9,000, pension 4,500 → total 103,500
2. A net of 8,675 commute = 94,825
3. B: bonus 12,750, pension 6,800, equity 10,000 a year → total 114,550
4. B has no commute, so net = 114,550

B wins by 19,725 a year despite a base that is 5,000 lower. Comparing base alone would have picked the worse offer by a wide margin.

Reading the result

• Discount equity heavily unless it is liquid. Public-company shares vesting on schedule are close to cash; private-company options are a lottery ticket with a strike price, and valuing them at the last funding round is optimistic. Many people apply a 50–70% discount to private equity, and some count it as zero.
• Target bonus is not guaranteed bonus. Ask what percentage of target was actually paid in each of the last three years — the answer is often well below 100%, and sometimes zero.
• Pension match is real money you only get by contributing. An 8% match requires you to put in 8%; if you cannot afford to, the headline figure is not available to you.
• Some costs are job-specific beyond commuting: parking, a required wardrobe, relocation, or losing a notice period. Count them once against the offer that causes them.

Common questions

How should I value equity in a private company?

Conservatively, and separately from cash. Note the strike price, the vesting schedule, and the fact that you may never be able to sell. A common approach is to compare offers on cash-only terms first, then ask whether the equity is worth the gap — which forces the question of what you would pay for that lottery ticket.

Should I include the commute in a compensation comparison?

Yes, as a cost. It is money you spend to hold the job and it disappears if you take the remote offer. In the example it is 8,675 a year, which is larger than the 5,000 base difference that would otherwise have decided things.