RSU vs. Salary Comparison

I've sat on both sides of this decision more times than I can count — as a hiring manager trying to close candidates at a growth-stage public company, and as a candidate weighing my own offers. The pattern that repeats: candidates stare at the top-line comp numbers, pick the bigger one, and underweight the risk attached to the equity slice. Six months later the stock is down 30%, the grant is worth $168k instead of $240k, and nobody remembers that the offer letter said "expected value."

RSUs are compensation, but they're compensation with a price attached. A $240k four-year RSU grant at $100 per share is 2,400 shares. If the stock runs to $140 by mid-vest, that grant is worth $336k. If it drops to $70, it's worth $168k — a $72k swing on a single input neither you nor the company controls. The salary side has no such variance. A $180k base is $180k next year regardless of what the stock does.

The tool runs three scenarios: the cash-heavy 4-year total (salary × 4), the equity-heavy base case (lower salary × 4 plus RSU grant compounded at your growth rate), and the equity-heavy downside (same salary × 4 plus grant adjusted for the drawdown you specify). If the base-case equity offer beats cash by a wide margin and the downside still beats cash, the equity offer wins. If the base case barely beats cash and the downside loses badly, you're being paid to carry risk — decide whether that's a trade you want.

Cash-heavy salary offer. The base salary of the offer with the smaller equity component. Don't include bonus; model that separately if you want.

Equity-heavy salary offer. The base salary of the competing offer with the larger RSU grant. This is usually 10-25% lower than the cash-heavy number.

RSU grant value at offer. The total grant value as stated in the offer letter. Typical tech-company offers quote this as "$240k over 4 years" — enter 240000. If the offer is "3,000 shares at a current price of $80," enter 240000.

Vest period. 4 years is standard with a 1-year cliff at most public tech companies. Some companies (Amazon, notably) use backloaded vesting: 5% year 1, 15% year 2, 40% year 3, 40% year 4. For backloaded schedules, use the Equity Vesting Schedule Calculator instead — this tool assumes even vesting.

Annual stock growth. 8% matches S&P long-run returns. 12-15% is the last-decade mega-cap tech rate but not a safe planning assumption for the next four years. Use the company's 4-year trailing return if you want a grounded number; I would not use anything above 12% as a base case.

Downside scenario. -25% is roughly a moderate bad stretch for a public company. -40% to -50% is closer to a bear-market scenario. If you're evaluating a pre-IPO private grant, your downside is -70% or -100%; private equity is illiquid and dilutes.

Here's a real pattern I saw last cycle. A senior software engineer had two offers in hand. Offer A: $180k base at a mid-sized profitable SaaS company with a small annual RSU refresh. Offer B: $150k base plus a $240k four-year RSU grant at a mid-cap public growth company trading at $95/share.

Run the math. Cash offer 4-year total: $720k flat. Equity offer at 8% annual growth: $600k salary + $240k × (1.08)² ≈ $280k of equity at mid-vest valuation = $880k. At -25% downside: $600k salary + $180k equity = $780k. Even in the downside, the equity offer beats cash by $60k, and in the base case it beats by $160k.

But watch the -40% scenario. $600k salary + $144k equity = $744k — still ahead of cash by $24k but close to tie. That tells you the equity offer has a reasonable margin of safety but not infinite — if the stock runs negative 50%+ or the company cuts the refresh grants, the cash offer starts to look smart in retrospect.

The candidate took Offer B. Mid-vest, the stock was up 18%. Year-4 total landed at roughly $940k. The cash offer at $720k would have been the safe choice; the equity offer was the better one, but not by the margin the base case projected. Real-world stock returns almost never exactly match your growth assumption.

The "stock change needed to tie" output tells you what has to happen for the two offers to produce equal 4-year totals. In the example above, $30k of annual salary difference × 4 = $120k gap. Against a $240k grant, that's a 50% stock increase needed over 4 years — or about 10.7% compounded annually.

Now ask yourself: does that company's stock hit 10.7% CAGR over the next 4 years? Look at the last 4-year CAGR. Look at the earnings growth rate. Look at the forward P/E. A mature mega-cap trading at 30x forward earnings probably delivers 6-10% annually. A high-growth company trading at 8x revenue could deliver 15-25% — or lose 40%. The breakeven is an honest goalpost. If you can't defend the growth assumption to yourself, don't take the equity offer.

When I coach candidates, I ask: "If the stock goes sideways for four years, are you still happy with this offer?" If the answer is no, they're over-indexed on the bull case and should take the cash.

Offer letters dramatically oversimplify equity. Five things that change the math and almost never appear in the letter:

• Refresh grants. Most public companies grant additional RSUs annually, typically 20-40% of the initial grant. If you plan on a 4-year stay, refreshes can add $100-400k of additional equity to the pile. Ask the recruiter for the typical refresh size at your level. "It depends on performance" is a dodge — they know the median.
• Performance-based RSUs (PSUs). At the senior level, a chunk of the grant is often PSUs that only vest if company revenue or stock hits certain targets. Ask explicitly: "Is this grant time-vested RSUs or performance-vested PSUs, and if PSUs, what's the target and historical hit rate?"
• Tax withholding at vest. RSUs are taxed as ordinary income when they vest. Most companies do a "sell-to-cover" at the flat 22% federal supplemental rate — which under-withholds if you're in the 32%+ bracket. You owe the difference in April. Budget for it.
• Trading windows. Public company employees can only sell RSUs in open trading windows (roughly 4 weeks per quarter, post-earnings). If you need liquidity outside those windows, you're stuck.
• Clawback and non-compete. Read the equity plan document, not just the offer letter. Some plans claw back unvested RSUs if you leave for a competitor; some define "competitor" so broadly that half of the industry is off-limits.

This tool assumes public-company RSUs with a real market price. If you're evaluating a startup offer, the math is different and less generous than the offer letter suggests.

Startup options have a strike price (usually the last 409A valuation) and a fair-market value that's only realized at exercise. The grant's "value" is the spread between the strike and a future FMV — and that future FMV could be zero. Most venture-backed startups don't return meaningful money to employee common stock; preferred shareholders collect first in an acquisition, and IPOs remain rare.

A reasonable heuristic: value pre-Series-B equity at 0-20% of paper value. Series C-D at 20-40%. Late-stage unicorns at 30-50%. Only at the IPO road-show stage (within 6-12 months of going public) does paper value approach real value. If you're joining a Series A for the equity, you're making a venture bet with your career; make sure the base salary alone is livable because the equity probably won't pay out.

There's a financial version of this decision and there's an emotional version. The financial version says: if the base case equity offer beats cash by 20%+ and the downside still beats or ties cash, take the equity. The emotional version asks: can you watch the stock price for four years without losing sleep?

I worked with an engineer who took a heavy-equity offer at a public growth company. Base case projected $250k upside vs. her cash alternative. Six months in, the stock was down 38%. She checked the ticker three times a day. She called her recruiter asking if there was any way to renegotiate. She moved her RSU sell schedule to the absolute minimum window and held shares hoping for a recovery that took 14 months to materialize.

She made more money in the end. But she didn't enjoy year one, and her work suffered because her head was in her brokerage account. If stock-watching would wreck you, take the cash offer even if the math modestly favors equity. Compensation you can't actually enjoy isn't compensation.

1. Run base case, upside, and downside. If the downside loses to cash by more than 10%, you're being paid to carry a lot of risk.
2. Check the company's 4-year stock CAGR. Compare it to your growth assumption. If yours is higher, you're projecting better-than-recent performance.
3. Ask for the typical refresh grant size. Year 2-4 refreshes can be 50-100% of the initial grant over the vesting period.
4. Ask whether any of the grant is PSUs. If yes, ask for the historical hit rate on those targets.
5. Read the equity plan document. Vesting schedule, cliff rules, clawback, non-compete, acceleration-on-termination clauses all matter.
6. Compute after-tax. RSUs vest at ordinary rates with under-withholding. Assume 35-45% effective rate on vest, depending on your state.
7. Check your own risk tolerance. If you'd panic-sell on a 30% drawdown, the equity offer isn't for you regardless of the math.