How To Understand Your Total Compensation Package

Congrats on getting an offer! Trying to interpret your startup compensation package? We spoke with seasoned recruiters, exceptional top talent, and Contrary's portfolio founders to put together a guide to help you interpret and negotiate your compensation.

Total Compensation Package

Core Components

Base Salary: the amount of cash you will earn annually, pre-tax.

• A good follow-up question: ask whether the salary will be paid weekly, bi-weekly, or monthly. Pay schedule is not negotiable, but knowing when you can expect your direct deposit in your bank account is important for your personal budgeting.
• Some companies, particularly pre-seed and seed-stage startups, offer a lower salary upfront but promise a significant raise after completing their series A fundraising. Early-stage companies may do the same after signing a large contract.
• You can use resources like Pave to compare your compensation numbers with others and industry averages.

Equity: some form of ownership in the company, typically stock options.

• For a public company, equity (i.e., stocks on the market) can sometimes mean an immediate increase in your assets.
• For startups and private companies, equity compensation represents potential profit should the company go public in the future. Equity can be the most confusing part of the compensation package, so we made a separate guide to help you interpret how this component.

Startup Search Guide: Equity as Compensation
Healthcare Benefits

• The Affordable Care Act mandates that all U.S. businesses with 50 or more full-time employees must offer health insurance to salaried employees or hourly employees working 40 or more hours per week.
• Smaller companies may not be legally required to offer health insurance, but they know it is the most attractive employment benefit in American business. Some even offer plans that cover dental and vision insurance too.
• Typically, a company covers 80% of the plan’s premium and the employee pays the remaining 20% with pre-tax deductions from their paycheck. The employee is responsible for paying deductibles, co-pays, and other charges related to their health care.

For more detailed information on understanding healthcare options, check out Understanding health insurance costs makes for better decisions from healthcare.gov

Potential Add Ons

Signing Bonus: one lump sum that is given to you after you start the job, usually about a month in.

• Make sure there aren’t any strings attached that you’re not comfortable with. “Clawbacks” are a common caveat to signing bonuses and mean you will have to repay the bonus if you and the company part ways before a certain date or target.
• Typically you can refuse the signing bonus and still accept the job if you’re uncomfortable with any conditions attached to the bonus.

Yearly Target Bonus: reward given at the end of the year if you meet your position or department’s target goals.

• The company sets the target and the bonus amount. Some places reward a multiplier of the bonus (usually between 0 and 2x) based on performance, with above-and-beyond performers receiving more than those who meet the minimum threshold.
  

Additional Benefits
Additional perks might be what Silicon Valley is most famous for. The perks can be almost anything, such as a company gym (Google), catered meals available at the office (LinkedIn), or complimentary use of the company product (Airbnb). As more companies have gone remote-first, they’ve tailored their benefits accordingly. Now it’s common to see self-care stipends, education stipends, and reimbursements for buying at-home exercise equipment, grocery delivery, or home office equipment.