Step 1: Start with Base Salary
Your base salary is the foundation of your compensation. This is the guaranteed annual amount before taxes.
Example: $150,000 annual base salary
Step 2: Add Variable Compensation
Variable compensation (bonus) is typically expressed as a percentage of base salary or a target dollar amount. Consider realistic achievement levels — 100% is target, but actual payouts vary.
Target bonus: $30,000 (20% of base)
At 100% achievement: $30,000
At 80% achievement: $24,000
At 120% achievement: $36,000
Step 3: Calculate Equity Per Year
Equity (RSUs or options) vests over time according to a schedule. Don't just divide by 4 — account for the actual vesting percentages.
RSU Grant: $200,000 over 4 years
Standard vesting: 25% per year
Year 1 RSUs: $50,000
Year 2 RSUs: $50,000 (assuming flat stock price)
Important: RSU value changes with stock price. If stock rises 20%, Year 2 RSUs would be worth $60,000.
Step 4: Sum for Each Year
Add up all components for each year to get annual total compensation.
| Component | Year 1 | Year 2 |
|---|---|---|
| Base Salary | $150,000 | $154,500 |
| Bonus (100%) | $30,000 | $30,900 |
| RSUs | $50,000 | $55,000 |
| Total | $230,000 | $240,400 |
* Assumes 3% salary growth and 10% stock price increase in Year 2
Step 5: Calculate Multi-Year Totals
For comparing offers or planning, sum across multiple years. A 4-year or 5-year total gives you the full picture of what an offer is worth.
5-Year Cumulative Total: $1,200,000+
(This varies significantly based on stock price performance)
Common Spreadsheet Mistakes
- Dividing RSU grant by 4 without accounting for actual vesting schedule
- Using grant price instead of current stock price
- Forgetting to model stock price changes over time
- Not accounting for refresher grants in Year 2+
- Comparing Year 1 only instead of multi-year totals
Frequently Asked Questions
What is included in total compensation?
Total compensation typically includes base salary, bonuses (target and actual), equity (RSUs or stock options), and sometimes benefits like 401k matching. The calculator focuses on the cash and equity components.
Should I use grant value or current value for RSUs?
Use current stock price for the most accurate picture. Grant values are based on historical prices and may not reflect what you'll actually receive when shares vest.
How do I account for stock price changes?
Use the Advanced tab to model different stock price scenarios. Consider both optimistic (stock grows 10%/year) and pessimistic (stock drops 20%) cases.
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