A signing bonus of 100% of salary isn’t uncommon in the tech industry. While this sounds amazing, it’s often nothing more then replacement for the otherwise lost income from unvested equity.

Companies quote total compensation which is a a combination of salary, cash bonus, and equity. As an example, imagine making a steady state total compensation of 200$/ year*. For this example, imagine this breakdown:

  • Base salary: 150$/year, paid out bi-weekly.
  • Cash Bonus: 25$/year, paid out weeky
  • Equity Grant: 25$/year, paid out anually vesting over 5 years.
  • Equity 5th at year company: 25$ paid out annually.
  • Equity 1st at year: 5$ paid out first year.

Imagine you switch companies right after the cash and equity has been rewareded, aand negotiate a total compensastion of 200$/year, with the same salary/cash/stock ratio.

The first year your comp will only be your salary - 150$. This means you’re losing 50$ on the first year. E.g.

  • Base salary: 150$/year, paid out bi-weekly.

The second year, you’ll get salary, cash bonus, and some equity, BUT your equity hasn’t vested, so you’ll only make salary and bonus of 175$, meaning you still lose 25$ in the second year.

  • Base salary: 150$/year, paid out bi-weekly.
  • Cash Bonus: 25$/year, paid out weeky
  • Equity Grant: 25$/year, paid out anually vesting over 5 years.

Continuing the math, you’ll actually need a signing bonus of 100$ to just cover your lost income from the previous years. Lost income:

  • Cash Bonus Year 1: 25$
  • Equity Year 1: 25$
  • Equity Year 2: 20$
  • Equity Year 3: 15$
  • Equity Year 4: 10$
  • Equity Year 5: 5$

Suddenly your 100% of salary signing bonus of 100$ doesn’t seem nearly as awesome.


NOTE: Cash bonus and equity often vary based on performance. This article assumes you always perform to the same target performance. However when you are negotiating your signing bonus, you need to take your variable performance into account.