Understanding Your Offer

Are you having some difficulties understanding your offer? Let’s run through a typical offer step by step. Your compensation usually consists of 5 components.
1. Base salary
2. Bonus
3. Signing Bonus
4. Equity
5. Relocation Package
1
💰Bonus
Bonus can be given as a percentage of base salary, as a target dollar amount, or based on commission. A number you want to understand is what the on-target yearly bonus is, which is the amount you’d expect to hit in an average situation.
2
🤑Signing Bonus
Is an additional cash sum given upfront to “sweeten” the deal. Be mindful that this usually has to be paid back if you do not stay with the company for a period of time (usually one year).
3
🏙️Relocation Package
This is only relevant if you’re actually moving for the job. The two most common scenarios are that the company offers to reimburse you for moving expenses and the company pays you a lump sum for relocation expenses (note that this is counted as income and taxed usually). Sometimes the company can ask you to pay this back if you do not stay for a certain period of time (usually one year).
4
📈 Equity
If your company is a public, then equity is easy to value equity. Look up what the share price of your company is and multiply it by the number of shares you’re receiving.

If your company is a private then you cannot value your equity publicly. You have to rely on internal company metrics to be able to calculate the value of it.

Ask the company for the 'strike price' and the 'share price.' The share price is how much the equity is worth. The strike price is how much you’d have to buy the equity for. Subtract those two numbers and multiply them by the number of shares to get the value of your equity.

It is common for equity to vest over a number of years with a cliff. Typical is a 4-year vest 1-year cliff. This means that before you stay at the company for 1 year, you will receive 0 equity. Then at the one year mark, you receive 25% of your equity. You’ll receive all your equity at the end of 4 years.

Remember, you have to buy your equity. So if you stay for a year but don’t have cash to buy your options, you’ll walk away with 0 equity.