How to Read Your Compensation Package: Beyond Base Salary

Base salary: the floor, not the ceiling

Base salary is predictable and liquid — you receive it every pay period regardless of company performance. That makes it valuable, especially early in your career when you're managing cash flow.

What to evaluate:
• **Market rate**: Is the base at, above, or below market for your role, experience level, and location? Use multiple sources (Levels.fyi for tech, Bureau of Labor Statistics, industry surveys) to triangulate.
• **Review cycle**: When is your first performance review? Many companies have annual reviews, meaning your base won't change for 12 months after you start. If you're starting mid-cycle, ask about your review timeline.
• **Salary band transparency**: Some companies share the salary band for your role. If they will, knowing your position within the band tells you how much upside exists before you hit the ceiling.
• **Location adjustments**: Remote and hybrid roles increasingly use geographic pay adjustments. If you plan to relocate, understand how that affects your salary.

Equity: the upside that might not materialize

Equity compensation — stock options, RSUs, or direct stock grants — can be worth significantly more than your base salary. It can also be worth nothing.

**RSUs (Restricted Stock Units)** in public companies are the most straightforward: they vest over time and convert to shares you can sell. The value at vesting is taxable income.

**Stock options** give you the right to buy shares at a fixed "strike price." Options in private companies may vest but be difficult or impossible to exercise or sell until a liquidity event (IPO, acquisition).

Key questions for equity evaluation:
• **What is the strike/exercise price?** For options, how does it compare to the current 409A valuation or fair market value?
• **What is the vesting schedule?** Standard is 4 years with a 1-year cliff. Any departure before the cliff means zero equity.
• **What happens on termination?** Options typically expire 90 days after leaving. If you're likely to leave before a liquidity event, understand when you must exercise.
• **What percentage of the company does your grant represent?** The share count means nothing without knowing total shares outstanding.
• **What is the company's funding history and valuation?** For private companies, the equity is only valuable at exit.

For most startup jobs, treat equity as a lottery ticket — potentially life-changing, but not something to count on for financial planning.

Bonuses: structure and conditions matter

Many jobs include bonus potential — discretionary, performance-based, or some combination. The key is understanding what "up to X%" actually means in practice.

**Target vs. maximum**: A "20% target bonus" typically means you'll receive 20% if you meet all targets, with potential for more at strong performance and less (or nothing) if you underperform or the company underperforms.

**Discretionary bonuses**: Bonuses described as "at the company's discretion" are not guaranteed regardless of your performance. They can and do get cut in difficult years.

**Vesting and clawback conditions**: Many signing bonuses and some performance bonuses require you to stay employed for 1–2 years or repay them. Read the conditions before accepting.

**Payment timing**: Year-end bonuses are typically paid in Q1. If you start in December, you may need to be employed the full year to receive anything.

What to ask:
• What percentage of eligible employees received their full target bonus last year?
• Has the bonus target or formula changed in the last 3 years?
• What's the most common reason for a partial or zero bonus payout?

Benefits: the underrated part of the package

Benefits can represent $15,000–$30,000 in annual value — more for positions with generous health insurance or retirement matching.

**Health insurance**: For US employees, compare the premium cost you'll pay, the deductible, and whether your preferred doctors and hospitals are in-network. A plan with a lower premium but a $5,000 deductible may cost you more out of pocket than one with a higher premium.

**401(k) matching**: A 100% match on up to 4% of salary is effectively a 4% raise. Understand the vesting schedule — some matches vest over 3–6 years, meaning you forfeit unvested matches if you leave early.

**PTO and sabbaticals**: Unlimited PTO policies often result in employees taking less time off, not more. Ask what the average PTO taken per year is. Some companies have "unlimited" policies with a de facto culture of minimal time off.

**Other valuable benefits**: Equity refresh grants (keeping you incentivized after year-four cliff), parental leave (both primary and secondary), professional development budgets, home office stipends for remote workers, and commuter benefits.

Reading the offer letter vs. the employment contract

Most job offers come in two documents: an offer letter (a summary document you sign first) and an employment agreement (the full legal contract you may sign separately or at the same time).

The offer letter typically covers: start date, base salary, job title, reporting structure, and a summary of benefits. It's not the full picture.

The employment agreement is where the important legal provisions live: non-compete clauses, IP assignment, arbitration, confidentiality, termination conditions, and severance (if any).

The most common mistake: accepting the offer based on the offer letter without reading the employment agreement before your start date. In most states, you can still negotiate terms after signing the offer letter but before your start date — and certainly before signing the employment agreement.

Key provisions to review in the employment agreement:
• Non-compete scope and duration
• IP assignment (especially for side projects)
• At-will termination and any severance protections
• Bonus conditions and clawback provisions
• Arbitration and class action waiver

If you're unsure whether a provision is standard or unusual, an AI contract review tool like ShouldISignAI can flag the red flags before you sign.

Negotiating the full package

Most candidates negotiate base salary and stop there. Everything else is negotiable — and in some cases, employers have more flexibility on non-salary items than on salary itself.

What's commonly negotiable:
• **Signing bonus**: One-time payment to offset unvested equity you're leaving behind or cover relocation costs. More flexible than base salary in many companies.
• **Equity grant size**: Often negotiable, especially at smaller companies. Ask for the reasoning behind the grant size.
• **Remote/hybrid flexibility**: If not offered, it's worth asking about. The value of eliminating a commute is real.
• **Start date**: Extra time between jobs is valuable. Asking for a later start date has almost no downside.
• **Non-compete narrowing**: Duration, geography, and activity scope are all negotiable before signing.
• **Severance**: For senior roles, explicitly negotiating a severance agreement at the time of hire is much easier than after the fact.

The rule of thumb: the worst that can happen when you ask for better terms is that the employer says no. Most will say yes to at least something — and the combined value of all the small improvements can be substantial.