UAC
🚀Growth & Career

Is the Equity Package Worth the Salary Cut?

Is the equity package actually worth the salary cut?

What This Does

When a company offers you equity in place of salary, they're asking you to accept risk in exchange for potential upside. The question is never "is equity good?" — it's "is this equity good enough to justify this specific salary gap, over my likely time horizon, at a realistic exit multiple?" The Salary vs Equity Calculator runs a full side-by-side comparison of two offers: one with higher salary and modest equity, one with lower salary and a larger equity grant. It models both on an after-tax, multi-year basis — accounting for your vesting schedule, the exit multiple you think is realistic, and the actual salary gap you'd be accepting. The output is a clear winner determination with a dollar-figure advantage, a timeline showing when (if ever) the equity offer overtakes the salary offer, and a scenario table showing how the winner changes across exit multiples from 0.5× to 10×. This is the calculator for anyone comparing a startup equity package against a higher-paying offer at a larger company — with their actual numbers, not generic assumptions.

When Should You Use This?
  • Comparing a startup offer with significant equity against a higher base salary at a larger company
  • Evaluating whether to join a pre-IPO company at a salary discount in exchange for RSUs
  • Deciding between two offers where one front-loads cash and the other front-loads equity
  • Modeling how different exit multiples change which offer is better
  • Calculating the exact multiple your startup equity needs to reach for the package to break even
Example Scenario

Sarah receives two offers: Company A pays $180k with $50k in RSUs vesting over 4 years at an expected 1.5× return. Company B pays $150k with $300k in options at an expected 3× return over 4 years. At a 35% tax rate, Company A's 4-year total is $512k. Company B's total is $526k — a $14k edge for the equity package. But at 1× exit, Company A leads by $112k. The break-even multiple for Company B is 2.1×.

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Common Mistakes to Avoid
  • Using the headline equity grant number without applying probability of loss — most startup equity is worth far less than stated.
  • Ignoring the vesting cliff — leaving before year 1 means zero equity regardless of grant size.
  • Comparing gross numbers — the salary gap is after-tax cash vs. equity which may be taxed differently at exit.
  • Not modeling the break-even multiple — knowing what the equity needs to return is more useful than a single scenario.
Frequently Asked Questions

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