Every company has different ways of compensation. Some companies have amazing benefits, but lower pay. Some value equity over base salary. Some don’t offer a 401(k) and some do, but don’t offer matching.
You need to add up the following:
- Annual base salary
- Cash bonuses
- Value of stock options/RSUs (restricted stock units)/ESPP (employee stock purchase plan) based on the current stock price
- 401(k) matching (how soon does it vest?)
- subtract the cost of your health insurance premiums and your estimate of how much you would spend on co-pays/etc.
- subtract any 401(k) matching you would walk away from at your current employer
- value of other benefits such as free parking at work, lunch, dinner, life insurance policy, etc.
You should also add up the above over the same time period with your current employer.
How do the two amounts compare? Ideally, the amount with the new employer should be a step up from the amount with your current employer.
The catch whenever I try to play with the numbers is the amount of 401(k) matching that I would walk away from if I took a job with another company. Once my 401(k) matching has vested, that will be no longer a concern.
It’s up to you to decide how much an offer needs to be to switch companies. Personally, I would like to see my overall compensation go up by more than it has in the last few years, so probably around 10-20%. But when it really comes down to it, which product(s) would I prefer to spend my working hours improving?
(No, I am not looking for a new job, but I have been thinking lately about how exactly I would evaluate an offer for a different company.)
Readers, how do you evaluate competing job offers?