A bigger equity percentage does not automatically compensate for a lower salary. Start with the cash difference over the same period, then model what the extra equity could pay under explicit exit assumptions. These examples compare two packages at the same company; they are illustrations, not market benchmarks or predictions.
Cash over your chosen period plus equity after dilution.
Offer A
Offer B
Keep your offer questions and assumptions together
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For UK tax scheme information, see GOV.UK: Tax and Employee Share Schemes.
Suppose package A pays £90,000 a year with 0.25% equity, while package B pays £80,000 with 0.50%. Over four years, A pays £360,000 and B pays £320,000 before tax. The cash difference is £40,000. This assumes unchanged salaries and four full years of employment. Compare bonuses, pension contributions and benefits separately if they differ.
B adds 0.25 percentage points of ownership. If a future funding round dilutes both grants by 20%, that extra ownership becomes 0.20 percentage points: 0.25% × 0.80. This example assumes full vesting. At 50% vesting, the extra vested ownership would be 0.10 percentage points. Use the actual grant schedule rather than assuming every departure happens after full vesting.
Assuming full vesting, 20% dilution, no exercise costs and a simple pro-rata payout: at zero equity payout, A totals £360,000 and B £320,000. At a £10 million sale, A totals £380,000 and B £360,000. At £20 million, both total £400,000. At £50 million, A totals £460,000 and B £520,000. These totals combine four years of gross salary and hypothetical equity proceeds; they are not money available today.
A break-even threshold is not the probability of an exit. It does not account for when proceeds arrive, the time value of money, taxes, investor liquidation preferences, debt, transaction costs, or grant-specific rights. Those factors can materially change or eliminate the payout. If exercise costs differ, include the difference in the calculation and check whether each grant is in the money. Use EquityLens Offer Comparison, linked in the navigation, to vary the numerical assumptions.
Do not treat equal exit values as equally likely at different companies. Compare each company's funding, business performance, capital structure and route to liquidity separately. The same £20 million threshold can represent very different outcomes. Keep the zero-payout case visible and distinguish what is documented from what is an assumption.
For two packages at the same company, divide the salary difference over your comparison period by the extra vested ownership fraction after dilution. This simple formula assumes equal exercise costs and a pro-rata payout before tax. Unequal costs and investor preferences require a more detailed model.
No. A 20% reduction multiplies your existing ownership by 0.80. A 0.50% grant becomes 0.40%. The reduction is 0.10 percentage points, not 0.20 percentage points.
Equity is not regular cash compensation. A model can compare hypothetical outcomes, but vesting, exercise costs, liquidity and the possibility of no payout mean a paper value is not equivalent to a salary payment.
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