Total Compensation Math: Comparing Offers Like a Spreadsheet
Two offers are comparable only after you convert both to the same number: expected annual value, adjusted for where you would live. That means valuing base, bonus, equity, and benefits in dollars per year, discounting the uncertain parts, and normalizing for cost of living. This article does that arithmetic once, slowly, with a worked example you can copy.
The qualitative side (growth, manager, red flags) matters as much and is covered in assessing job offers objectively. Do both analyses; decide with both.
The formula
Section titled “The formula”Annual total comp = base + expected bonus + annualized equity value × risk discount + benefit deltas, all divided by a cost-of-living index.
Each term needs honest inputs:
Base salary
Section titled “Base salary”The only guaranteed number on the sheet. Everything else is a probability.
Multiply the target bonus by how often it actually pays out. A “15% target” that has paid in full twice in five years is not 15%. Ask directly: “what percentage of target did the team receive the last two years?” A company that will not answer has answered.
Equity: the term that needs the most discounting
Section titled “Equity: the term that needs the most discounting”Equity value depends on what the shares are worth and whether they will ever be liquid. The equity compensation guide covers the instruments in depth; for the spreadsheet, the short version:
- Public-company RSUs: annualized grant value at today’s price. Liquid, so no liquidity discount; apply your own judgment about stock volatility. See the stock vesting guide for how vesting schedules shift the timing.
- Private-company RSUs or options: start from the last preferred-round price or the 409A valuation, then discount hard for liquidity and dilution. A common candidate mistake is valuing startup paper at face value; a defensible habit is modeling three cases (zero, moderate, home run) and weighting them honestly. For most early-stage offers, “zero” deserves the largest weight; that is not cynicism, it is base rates.
- Options specifically: value = (share value − strike price) × shares, not share value × shares. Underwater or near-strike options can be worth little today; when your stock options are underwater covers that case, and early exercise and 83(b) elections covers the tax lever if you join early.
Benefits: the quiet thousands
Section titled “Benefits: the quiet thousands”Most benefit differences are worth real money and get ignored because they arrive as policy documents instead of numbers. Convert the big four:
- Retirement match: a 4% match on $180k is $7,200/year of guaranteed comp. (US and EU guides.)
- Health insurance: premium difference × 12, plus deductible difference if you actually use care. (Understanding healthcare benefits.)
- PTO delta: each additional week of real, usable vacation is roughly 2% of salary in time value.
- Remote/commute: commuting costs (transit or car + hours) are post-tax money and unpaid time; price them.
Benefits beyond salary covers which of these are negotiable.
Cost of living: the divisor people skip
Section titled “Cost of living: the divisor people skip”$160k in Austin and $185k in San Francisco are not ordered the way they look. Divide each offer’s total by a cost-of-living index for its location (the cost of living evaluation guide walks through the method, and Numbeo has city-level data). Taxes belong in this step too: state and country tax differences routinely swing take-home by five figures.
Worked example
Section titled “Worked example”Offer A: public company, San Francisco. Offer B: Series C startup, remote from Denver.
| Component | Offer A (SF, public) | Offer B (Denver, Series C) |
|---|---|---|
| Base | $185,000 | $165,000 |
| Bonus | 10% target, pays ~80% → $14,800 | none |
| Equity | $120k RSUs / 4 yrs → $30,000/yr, liquid | 0.08%, ~$400k paper / 4 yrs → $100k/yr face |
| Equity, discounted | $30,000 | weighted cases (60% zero / 30% mid / 10% high) → ~$25,000 |
| 401(k) match | 3% → $5,550 | 4% → $6,600 |
| Healthcare delta | baseline | +$1,800 (better plan) |
| Nominal total | $235,350 | $198,400 |
| Cost-of-living index | 1.00 (SF baseline) | ~0.72 |
| COL-adjusted total | $235,350 | $275,600 |
The offer that looked $37k smaller is roughly $40k larger in lived value, and that conclusion is invisible without the divisor. It also reverses if you weight the startup equity at zero, which is exactly why the discounting assumptions belong on paper where you can argue with them.
Using the number
Section titled “Using the number”- Negotiate the guaranteed terms first. Base and signing bonus are certain; equity refreshes and title are promises. The spreadsheet shows you which lever moves your number most.
- Ask for the inputs you are missing. Strike price, latest 409A, vesting schedule, bonus payout history. Good companies hand you these; several now send a candidate packet with equity and cost-of-living explainers precisely so you can do this math. (Yogen-using employers include an Equity 101 Guide and Cost of Living Guide in theirs, which is a decent signal about how they treat people generally.)
- Recompute at counter-offer time. If your current employer counters, run the same sheet on the counter, including the parts a counter does not fix; counter-offer considerations covers that decision.
The spreadsheet does not make the decision. It makes the decision honest: once the money is one clean number per offer, you can hear what the rest of you thinks.