Understanding the Offer

## Why the headline number is not a salary A recruiter or compensation partner will often quote one big number for an offer. That number is a **sum of components with different behaviour**: some repeat every year, one arrives once, one depends on performance, and one depends on what you yourself put in. Decomposing the offer line by line is the single most useful habit in this part of a job search, because every later conversation — what you would want changed, what a second offer really pays, whether year two is a raise or a cut — runs on that decomposition. ## The five buckets **1. Base salary.** Recurring, contractual, paid on the normal payroll cycle. It is the only component that is both guaranteed and repeating, which is why it anchors everything else: bonus targets, retirement matches and often future raises are expressed as a percentage of base. **2. Target annual bonus.** Normally stated as a percentage of base (“11% target”). “Target” means the amount paid when company and individual performance land at plan. Actual payouts commonly move above or below target with a company multiplier, an individual multiplier, or both. Some plans prorate the first year by the months worked. Treat it as expected value, not as cash in hand. **3. Sign-on bonus.** One-time cash, typically paid in the first pay cycles or split across the first year. It very often carries a repayment clause if you leave inside a stated period. Because it does not repeat, including it in a number you describe as “annual” is the most common arithmetic error on this material. **4. Equity grant.** Usually quoted as a total value at grant, spread across a vesting period of several years. Only the portion that vests in a given year belongs in that year's total, and the realised value moves with the share price. The mechanics of grant types, vesting shapes, refresh grants and the tax treatment of vesting versus exercise vary by instrument, employer and jurisdiction, and belong to a dedicated equity discussion — for decomposition you only need the grant value, the vesting period and the shape. **5. Benefits.** Health and insurance coverage, paid leave, and an **employer retirement match** — commonly expressed as the employer matching your own payroll contributions up to a percentage of base. The match is genuine compensation but conditional on your contributing, and in some plans the employer portion itself becomes fully yours only after a period of service; plan rules and any tax treatment vary, so check the plan document rather than assuming. ## A worked decomposition Illustrative US-dollar figures for one mid-level backend offer in a major US market, invented for arithmetic practice rather than benchmark data — substitute your own numbers. | Component | Amount | Behaviour | | --- | --- | --- | | Base salary | 164,300 | recurring, guaranteed | | Target bonus (11% of base) | 18,073 | recurring, conditional | | Sign-on | 27,400 | one-time, often repayable | | Equity, 149,600 grant across four years | 37,400 per year | recurring while the grant lasts, value moves | | Employer retirement match, up to 4% of base | 6,572 | recurring, requires your contribution | Stated that way, three follow-up questions write themselves: does the bonus prorate in the first year, is the sign-on repayable and on what trigger, and is the grant value spread evenly or back-loaded. All of those change the number, and none of them are visible in a single headline figure. ## What to do with it Build the table before any conversation about numbers, from the written offer rather than from memory of a phone call. Keep guaranteed cash, conditional cash and equity on separate lines instead of collapsing them, and label every figure pre-tax, since tax treatment differs by component and by jurisdiction. Then compute two totals — the first year, and a later steady-state year — because those are the two numbers people actually confuse. Anything you cannot fill in is a question for the compensation partner, and asking it reads as diligence rather than as haggling.