The Five Things an Employer Is Actually Offering
WorldatWork, the professional association for compensation and total rewards practitioners, publishes a Total Rewards Model built on five elements: compensation, benefits, well-being, careers, and recognition [1]. It has been a standard reference for professional practice since 2000, and it gets revised as the market moves [1]. The current edition of the WorldatWork handbook covers the same territory in depth for the people who design these packages [2].
Reading an offer through those five elements changes what you see.
- Compensation is base pay, variable cash, and long-term incentives.
- Benefits are health, dental, vision, disability, life, and the retirement plan.
- Well-being covers time off, flexibility, leave policy, and support programs.
- Careers covers development budget, tuition support, internal mobility, and what the next role looks like from here.
- Recognition covers spot awards and the formal programs that decide who gets noticed.
Two of those five are cash you can count today. Two are cash you're spending anyway. One decides what you'll be worth in three years.
Price the Cash You Can Count
Every number on this ledger is eventually going to hold up a walk-away point, or fail to. So the rule I teach for the market range applies to the whole package: pull it from at least two independent sources, so one outlier doesn't distort your sense of the real band. Anything you can't source twice goes on the ledger as an estimate and gets labeled that way. A floor built on a number nobody will confirm is not a floor.
Base salary. The guaranteed number, and the one that compounds, since every future merit increase and most future offers are calculated from it.
Variable pay. Bonuses and commissions come with a target and a history, and those are different numbers. Ask what percentage of target was actually paid in each of the last three years, and to whom. Then use that history in your ledger, not the target. If nobody will tell you the payout history, that answer is information too.
Retirement match. An employer match is the closest thing to a guaranteed return in the package. A 6% match on a 100,000 salary is 6,000 a year you either take or leave behind, and that is arithmetic illustrating the method rather than a claim about the market. Run it on both offers instead of eyeballing the percentages.
Employer premium share. Ask for the benefits summary and find your monthly cost for the coverage you'd actually elect, family or individual. The difference between two plans can quietly outrun a base salary gap.
Development budget. Certification, conference travel, coaching, tuition. The company invests in the version of you that becomes more valuable, and you keep the skills wherever you go. If you'd pay for it yourself in the other job, it belongs on the ledger at what you'd have paid.
One line most people leave off entirely is an early review cycle: a written agreement to revisit compensation in six months instead of twelve, tied to specific results. That has a value, and it belongs on the page with the rest. It is one of the five levers I teach beyond base salary, and every one of them prices out somewhere on this ledger.
SHRM's HR advice column makes the same point to job seekers: people focus on base salary and underestimate the value of total compensation, and a lower base can be worth taking when the employer covers a large share of health care or provides substantially more paid time off [3].
What Equity Is Really Worth on the Day You Sign
Equity is where offer math goes wrong most often, because the exciting number and the reliable number are far apart.
Grants come in a few forms. Restricted stock units convert to shares as they vest. Options give you the right to buy at a strike price, and they're worth something only above that price. Profit interests and phantom units behave differently again. Whatever the form, four things determine what the grant is worth to you: the vesting schedule, any cliff before the first vest, the strike price where one applies, and whether there's a realistic path to selling. At a public company you can at least see a price. At a private company you're holding a number set by a valuation event, subject to dilution in the next round, with liquidity on a timeline nobody controls.
On the arithmetic, my answer is a decline, and I want it in plain sight rather than in fine print. This page does not publish a formula for annualizing an equity grant. Vesting schedules, valuations, and tax treatment vary too much for one formula to be honest across readers, and a number you can't defend has no business holding up a walk-away point. Put the grant on the ledger as its own line, label it an estimate, and take the actual grant documents to a qualified tax professional or financial advisor for the real math.
Then make the decision twice. Once with the equity counted, once with it at zero. If the offer only wins with the equity counted, you're being paid in optimism.
Career Lab does not provide tax, financial, or investment advice. Equity grants carry tax consequences that vary by instrument, jurisdiction, and timing. Take the actual grant documents to a qualified tax professional or financial advisor before you make a decision based on them.
Put It on One Page
Build the same ledger for each offer, annual, in this order: guaranteed base, variable pay at the payout history rather than the target, employer retirement contribution, employer premium share, development budget, then equity on its own line below the total, labeled as the estimate it is.
Then sit with the two things the ledger can't price. What the role does to your market value in three years, and what the schedule does to your life. The first belongs to the careers element in the model, and it's often worth more than every other line combined. The second is the one people override and regret.
Write both totals down before you feel anything about them, then decide with the ledger in front of you.