How to split a pay package

Four layers, not one number

Layer one is fixed cash, mainly pre-tax base. Layer two is short-term variable pay: annual bonus, commission. Layer three is long-term pay, such as equity that vests over years. Layer four is benefits and time: insurance, leave, remote work, on-call.

When a recruiting note adds the four into one large figure, ask for each layer and its assumptions. Ask especially whether equity uses an optimistic price or a price you could treat as real. Optimism makes the package look larger. It does not pay rent.

Public wage statistics are usually close to layer one, sometimes with part of a bonus. Comparing a package that includes an entire equity grant to a median makes you look far above the market, or makes the market data look useless. Split first, then choose which layer to compare.

What base pay decides

Base is the most predictable part, and it often sets overtime, severance, or benefit formulas. If probation pays 80%, multiply those months in. Do not let the post-probation number stand for the whole first year.

Ask three concrete things: the minimum and maximum base for this level; whether raises happen on a fixed month or only at promotion; whether probation pay matches the regular rate.

When both offers claim to be “competitive,” compare base plus the bonus you believe is real. A target bonus percent is not cash.

Questions that make a bonus clear

Ask what percent of base the target is, then what percent of target this team actually paid the last two years. Ask how much is company results versus individual results. If you only have a target, estimate payout at 50% to 70% and label it as an assumption on your sheet.

Find the clause on a partial first year and on leaving before the bonus is paid. If nobody can point to the clause, do not count a full bonus in year one.

For commission roles, also ask: is there a draw that is later deducted, do you repay it if you leave early, and is there protection in year one. Without those answers, commission stays uncertain. It is not base pay.

• Target percent
• Actual payout the last two years
• Company versus individual split
• Partial year and resignation rules

Split equity by year

Ask type, grant size, years to vest, whether vested amounts survive resignation, and whether grants are refreshed. “We give equity” is not an answer.

For public stock, use a conservative price times the amount that vests each year. For a private company, use two columns: a discounted last-round price, and zero. The zero column still has to cover living costs before the package is solid.

If base is frozen and they add signing equity, read the stay requirement and any clawback. Clawback turns “a big first year” into “you pay it back if you leave.”

Benefits and hours

Price only what is expensive for you: insurance you would otherwise buy, commuting, childcare, tools or licenses you must pay. A brochure “total benefits value” assumes everyone uses every item. That is not your budget.

For unlimited leave, ask how many days the team actually took. If they cannot say, record your current leave. Do not record “unlimited” as income.

Ongoing on-call and required office days lower pay per hour. Write expected weekly hours under the sheet. The same $100,000 at 40 hours and at 55 hours is not the same job.

A dollar example

Suppose base is $80,000, target bonus is 15%, and the last two years paid about 110% of target. Equity vests over four years, about $12,000 a year at a conservative price. Signing bonus is $15,000 and must be repaid if you leave within twelve months. Year-one cash is about $80,000 × 1.15 × 1.1 plus $15,000. The steady year drops the signing bonus: about $101,000, plus about $12,000 of equity vesting that year. Before you compare with a published median, check whether that median is wages only or includes bonus.

If they say the package is $140,000 but count four years of equity in year one, divide the equity back to a yearly vest. Otherwise year-two pay is overstated.

One row per offer: base, expected bonus, equity per year, signing bonus. Compare those dollar amounts, not the spoken package.

How to ask

“Please separate: pre-tax base, target bonus and the last two years of actual payout, equity grant and vesting years, signing bonus and stay requirement, and the main insurance I would pay.”

Where the written offer and the conversation differ, the writing wins. Email the difference before you sign. “There is usually a bonus” does not go on your sheet.

Tax and cross-border payroll change take-home pay. This article does not compute tax and is not financial advice.