Compensation Basics

Compensation is more than the salary line on your offer. Most packages are built from a few moving parts — base, bonus, equity — and sit inside a structure of bands that companies use to keep pay consistent. Newcomers often fixate on one number and miss the rest. Once you can read all the parts together, you can compare offers honestly, understand why a raise landed where it did, and have a far calmer conversation about money.

The three building blocks

Your base salary is the guaranteed money you are paid on a regular schedule. It is the most stable part of comp — it does not depend on a good year — which is why it tends to matter most for your day-to-day budgeting and for the size of future percentage raises.

A bonus is variable pay, usually tied to performance — yours, the team’s, or the company’s. It might be a target percentage of base (“15% bonus target”) that flexes up or down with results. Because it is not guaranteed, treat a bonus as upside rather than money you can fully count on each month.

Equity is partial ownership in the company, granted as shares or options. It almost always comes with a vesting schedule — you earn it gradually over several years, so it rewards staying. In a public company its value is easier to read; in a private one it depends on a future the company hopes for, which makes it the hardest piece to value and the easiest to over- or under-estimate.

Bands and ranges

A salary band is the pay range a company attaches to a given level — say, a “Senior” band running from a floor to a ceiling. Bands exist to keep pay fair and consistent, so two people doing the same level of work are paid comparably regardless of how hard they negotiated. Where you sit within your band matters: someone new to a level often starts lower in it, with room to rise as they grow into the role.

This explains a common surprise. If you are already near the top of your band, your raise may be modest even with strong performance — there is little headroom left. The bigger jumps usually come with a move to the next level, which lifts you into a new, higher band entirely.

Comp is a package, not a number. Adding up base plus expected bonus plus equity tells a truer story than any single line.

Total comp

Putting it together gives you total compensation — the sum of base, expected bonus and the annual value of equity. This is the figure to use when comparing two offers, because a higher base can be outweighed by a stronger bonus or equity grant, and vice versa. Compare like with like.

Spot the comp component

Read each situation and decide for yourself, then tap a card to flip it and check your answer.

Sort the comp parts

Drag each statement into the part of compensation it describes—or tap a chip, then tap a category. Hit Check placement when you’re done.

How to use it

When you get an offer or a raise, slow down and read the whole package. Ask which parts are guaranteed and which are variable, and over what period equity vests. A few clear questions go a long way:

• “Can you break the offer into base, bonus target and equity?”
• “What band and level does this role sit in?”
• “Where in the band would I start, and what would moving up the band look like?”
• “How and when does the equity vest?”

If you want to discuss a raise, anchor it in evidence and level, not feelings: point to the scope you now own and where it sits against your band and the next one. Stay non-confrontational — “Help me understand how my comp maps to the band” opens a better conversation than an ultimatum. Reading comp as a structured package, rather than a mysterious single number, turns money talk from stressful into straightforward.