Evaluating a job offer for a technology job can be challenging. Today, most offers include several multifaceted components, including cash, equity and benefits that must be valued, clarified and even negotiated to reach an overall agreement that is fair and mutually acceptable to both parties.
As the saying goes, the money’s in the details—so let’s get to it. Here’s a look at the main components and job details you should be analyzing closely before accepting or rejecting an offer.
Salary and Bonuses
Understanding the cash compensation in an offer may not be as straightforward as it seems.
Some companies try to make their offers more appealing by presenting cash compensation as a lumpsum amount that includes salary and bonuses—such as sign-on, relocation and annual performance bonuses—but these need to be broken out and evaluated separately, warned Josh Doody, a salary negotiation coach for high earners. That’s because some bonuses are a one-time thing, while others may provide an annual bonus of up to 20 percent of your base salary but are not guaranteed.
“When it comes to annual bonuses, you want to know how they assess performance and how often,” noted Colin Lernell, a senior product leader, career and negotiation coach.
For instance, will your bonus be pro-rated the first year? What’s the recent history of payouts? Are the terms realistic and achievable? If not, make up the difference by requesting a higher salary or a signing bonus. For instance, the average cash bonus paid to employees at the end of 2023 was down 21 percent from the previous year. Payouts that are below expectations can be demotivating.
Another note: These days, it’s very common for an employer to extend a verbal offer first, Doody said. When that happens, be sure to compare the written offer with your oral agreement to make sure they align.
Job Level and Salary Range
You need to know the guaranteed pay or salary, as well as the level or salary band for the position. Why? Because if they offer you a position and salary near the top of the pay grade, you may hit the cap and be unable to get raises without a promotion.
If you reach a stalemate when negotiating salary, try requesting a “higher level” position which might open the door to a higher salary, bigger bonuses and future increases. Even if you’re a junior tech pro, this strategy can sometimes yield dividends.
Equity
The key things to evaluate when you’re offered equity to join a company include the projected value of that equity, the timing of the payouts and tax implications, as well as your risk tolerance and need to balance fixed cash with variable compensation.
And since equity can be negotiated just like salary, it’s critical to evaluate every element in greater detail to ensure that you're getting the best deal.
For instance, if you’re offered restricted stock units or RSUs to join a public company, the first thing to evaluate is the vesting schedule, Lernell says. Do the units vest in equal amounts or are they front-loaded or backloaded? Is vesting based on length of employment or performance milestones? What will happen if you leave or are terminated? What will they be worth, realistically?
Details matter he added. “For instance, is the offer 100 shares over two years or 100 shares per year for two years?”
Within the next 10 years, it’s estimated that public companies will compensate employees with nearly $800 billion in RSUs. Doing your homework up front can lead to major financial rewards.
While you may want to consult an expert or use a calculator to estimate the value of stock options before joining a private equity startup, you should ask when and how the strike price will be set, how many shares are outstanding, the vesting period, and timeline required to purchase options after employment has ended.
Lernell suggests that you ask to see the company's most recent 409A valuation or ask if they’ve recently received a new round of funding. Should you pay the taxes up-front? These are all things to consider before you agree.
Offer to sign a non-disclosure agreement if necessary, but keep emailing the hiring manager or recruiter until you get all of the information you need to calculate the value of the equity component in a job offer. At that point, compare it to the going market rate.
Most importantly, ask about the company’s plans or practices for issuing refresher grants, especially if you plan to stay for a while, Doody said. Unless you receive a refresher, you may see a drop in total compensation once your initial options or RSUs are fully vested.
Benefits and 401(k) Match
Benefits, especially health and wellness coverage, can have a big impact on your quality of life, your family’s well-being and your financial stability. Make sure you understand the deductible, copays, coinsurance, out-of-pocket maximums, provider network, the premiums and the eligibility requirements. If necessary, use an app or comparison tool to estimate your out-of-pocket costs.
While you may not be able to negotiate the terms of a 401(k), some employers match dollar-for-dollar up to a certain percentage of the employee's contribution, while others may offer a partial match or none at all. Be sure to calculate the specific value of this benefit because over time, these matches add up.
PTO and Discretionary Perks
Negotiating extra vacation days, unlimited PTO or a flexible schedule before accepting a job offer is an entirely reasonable request. This is also the perfect time to request transportation or remote work stipends or reimbursement for training courses, certification exams or conferences.
Getting your employer to pick up the tab for out-of-pocket expenses or a potion of qualified childcare expenditures can have a big impact on your family’s bottom line, so they’re important to consider.
When it comes to perks, promises of future salary reviews or extra vacation days, sometimes hiring managers agree to things they won’t put in writing, Doody cautioned.
While that happens, it’s a good idea to send the hiring manager a follow-up email expressing thanks and summarizing any major perks or items they agreed to provide. With so much at stake, its important to try your best to understand, clarify, value and negotiate the critical components of a job offer before you commit.
