The short version
An equity offer is worth only what vests while you stay — and only if the stock cooperates. So compare three numbers, not two. Certain cash: base salary plus raises and the 401(k) match. Probable equity: the grant spread over vesting, grown at a sober guess, minus an uncertainty discount. Speculative upside: what the grant could be worth if the stock booms. Most people compare only the headline grant. A $200,000 grant becomes roughly $181,000 of real value after vesting, growth, and a discount — or far less if the stock falls. Run both offers through the equity vs salary calculator with your honest stay length.
The step-by-step method
a) Line up the base salaries first. Total base pay plus the 401(k) match over your planned stay, including raises — a deficit the grant must earn back.
b) Spread the grant over vesting. It is not paid on day one. Vesting a quarter a year, each tranche rides the stock from grant to vesting: value ≈ tranche × (1 + growth)year.
c) Apply an uncertainty discount. Shave value off for stock risk and missed targets — and for private or pre-IPO equity, no market to sell into until an IPO or acquisition that may never come. Use 10–20% for public companies, 30–50%+ for private.
d) Add raises and the 401(k) match — on base only. Raises are percentages of base pay, so the higher-salary offer's lead widens on its own.
e) Run bear, base, and bull scenarios. One number is a lie. If the equity offer loses the bear case and wins the bull case, you are being paid in risk.
The four questions that decide the outcome
1. Is the grant in dollars and share count — or vague percentages? Get the dollar value and share count in writing; percentages move with the stock.
2. What is the vesting schedule? Standard: four years with a one-year cliff — nothing vests until your first anniversary, then a quarter vests at once. Leave before the cliff and you forfeit all of it.
3. How long will you honestly stay? Most people stay two to four years. A four-year grant compared over a two-year stay means half of it never vests.
4. What growth do you really expect? Use the company's history or a conservative guess — not the growth that makes the offer win.
RSUs vs stock options, in plain English
RSUs vest into real shares at the market price. They are taxed as ordinary income at vesting; many use sell-to-cover and diversify, treating vested RSUs like cash compensation — the same mindset as the pay raise calculator.
Stock options are the right to buy shares at a fixed strike price, so they pay only if the stock beats the strike. If the stock doubles, options can be worth far more than equivalent RSUs; if it falls, they expire worthless.
Worked example: $150,000 + $200,000 RSUs vs $180,000
Offer A: $150,000 base plus a $200,000 RSU grant vesting over 4 years. Offer B: $180,000 base, no equity. Assume a 5-year stay, 3% raises, a 4% match, 5% stock growth, and a 20% discount. (Compare it yourself with the equity vs salary calculator.)
1. Certain cash first: Offer A's salary plus match over 5 years = $828,225; Offer B's = $993,870. The higher salary starts with a $165,645 head start.
2. The equity, vested and grown: the grant vests $50,000 a year. At 5% growth: $52,500 + $55,125 + $57,881 + $60,775 = $226,281 — discounted 20% to $181,025.
3. Base scenario: Offer A = $1,009,250 vs Offer B = $993,870 — the equity offer wins by ≈$15,380, a modest lead.
4. Scenarios: at −5% growth the equity is worth $140,975 after discount, so Offer A trails by ≈$24,670; at +15% it is worth $229,695, so Offer A wins by ≈$64,050.
5. Break-even: Offer A needs ≈$165,645 of risk-discounted equity to tie — roughly a $183,000 grant at base growth. Below that, the salary offer wins.
The taxes note
RSUs are taxed as ordinary income when they vest, on the shares' market value that day. Your employer withholds taxes at vesting; you reconcile at filing. The tool compares pre-tax totals; for spendable dollars after tax, see the take-home pay calculator and the bonus tax calculator. General information, not tax advice.
The negotiation checklist
1. Get the grant in dollars and share count, in writing. 2. Confirm the vesting schedule and the cliff. 3. Ask what happens to unvested equity if you are laid off vs quit. 4. Ask for a sign-on bonus to cover equity you forfeit at your current job. 5. If options: get the strike price, shares outstanding, and latest valuation. 6. Push base pay up first — raises and the match compound from base.
Frequently asked questions
How do I value RSUs in a job offer?
Spread the grant over vesting, grow each tranche at a realistic rate, and discount for uncertainty.
What does a one-year cliff mean?
Nothing vests until your first anniversary, when a quarter of a 4-year grant vests at once. Leave earlier and you forfeit it all.
What happens to unvested equity if I leave?
You keep what has vested; unvested equity is cancelled the day you leave. Negotiate a sign-on bonus to cover what you forfeit.
How much should I discount private-company equity?
Heavily. No market to sell into, shares locked until an IPO or acquisition — and most startups fail.
RSUs or stock options — which is better in an offer?
RSUs are safer: they vest into real shares at the market price. Options pay more if the stock soars, but can expire worthless.
Should I sell my RSUs when they vest?
Many sell-to-cover — selling enough shares to pay the vesting tax — and diversify the rest.
Is a lower salary with equity ever worth it?
Yes, when the risk-discounted equity beats the certain-cash gap across your scenarios. In the example it wins the base and bull cases, but loses the bear case.
How do raises change the comparison?
Raises are percentages of base pay, so the higher-salary offer's lead compounds every year — with the 401(k) match riding along. See the true hourly rate calculator.
Run your own numbers
The equity vs salary calculator totals both offers over your planned stay — spreading the grant across vesting, applying your growth guess and discount — and runs bear, base, and bull scenarios side by side. Enter your real numbers before you sign.