Compensation Analyzer

When to activate

Before finalizing any offer; during compensation market shifts; for equity grants; when evaluating internal promotion or retention packages.

When NOT to use

Not for headcount forecasting — use hiring-plan-builder. Not for interview process design — use interview-architect. Not for legal/tax advice on equity structures (escalate to legal counsel).

Compensation Analysis Checklist

Execute in order:

1. Establish role context — Title, level, team, location, scope (headcount managed, revenue owned)
2. Define market data sources — Levels.fyi, Radford, Salary.com, BLS, PayScale, company-specific peer group
3. Pull benchmark data — Salary 25th/50th/75th percentile; bonus range; equity package size
4. Model total comp — Salary + bonus + equity (annualized) + benefits; show 1-year, 4-year, and 10-year comp scenarios
5. Assess internal equity — Check for compression (new hire earning more than incumbent); flag if problematic
6. Evaluate cost impact — Calculate annual spend delta; assess headcount budget impact
7. Build offer recommendation — Position within market; justify vs. internal equity and budget constraints
8. Document assumptions — Data sources, market definitions, attrition/vesting assumptions

Data Sources & Methodology

Primary Sources

Market Definition

When benchmarking, define your peer group:

• Stage: Pre-seed, Series A/B, C+, late-stage, public
• Industry: Tech, Fintech, SaaS, etc.
• Geography: SF Bay, NYC, Austin, Seattle, Remote-first; adjust for cost-of-living
• Headcount: <50, 50–500, 500+

Example: "Comparable market is Series B/C SaaS companies, 100–300 employees, in tech hubs + remote-first"

Compensation Framework by Level

Individual Contributor (IC) Levels

Manager Levels

Manager (5–8 direct reports):

• Salary: 10–20% premium over IC at comparable level
• Bonus: 20–30% (tied to team outcomes + business goals)
• Stock: Similar to IC; vesting accelerates on promotion
• Total comp: $250–350K (Staff IC → Manager transition)

Director (15–30 headcount):

• Salary: $200–280K
• Bonus: 30–40%
• Stock: $150–250K/yr
• Total comp: $350–500K

VP/Executive:

• Salary: $250–400K+
• Bonus: 40–60%
• Stock: $250–500K+/yr
• Total comp: $500K–1M+

Total Comp Modeling Framework

Formula: Salary + Bonus + Annualized Equity + Benefits

Equity Assumptions

• Vesting: 4-year vest, 1-year cliff (standard)
• Annual equity value: Divide grant size by 4
• Modeled scenarios:
  • Conservative (50% of grant assumed to vest; assumes some unemployment)
  • Mid (75% of grant)
  • Optimistic (100% of grant; full tenure)

Example: Staff Engineer Offer

Offer components:

• Salary: $210K/year
• Bonus: 20% = $42K/year (if company hits targets)
• Stock grant: $120K total ÷ 4 years = $30K/year annualized
• Health benefits: $24K/year (fully loaded: medical, dental, vision, 401k match)

Total comp scenarios:

Note: Does not include pre-tax (401k match $6.3K) or bonus variance.

Internal Equity Audit Framework

Compression Check

Compression: New hire earning more than incumbent for same level/role.

Why it matters: Damages morale; signals inequity; risks of retention problems in tenured team.

Process:

1. Pull current salary for incumbent at same level/team
2. Compare to new offer
3. If new offer > incumbent by >3%, flag as compression risk
4. Options: Adjust offer down (if possible), budget for raise for incumbent, document business justification

Example:

• Current: Senior Engineer on Team A earns $170K (hired 2 years ago)
• New offer: Senior Engineer for Team B at $190K
• Compression risk: +12% (likely problematic)
• Solution: Either offer $175K instead (justify with different location/scope), or budget to raise incumbent to $180K

Market Position Analysis

Determine your company's positioning strategy:

• 50th percentile (market median): Competitive; "standard" offer
• 75th percentile: Premium offer for high-impact roles or talent shortage
• 25th percentile: Below-market; use only if: early-stage (equity upside), unique culture fit, or role not in hot market

Recommendation: Aim for 50–60th percentile for most roles; 70th+ for critical/hard-to-hire roles.

Cost Impact Calculation

Annual Payroll Impact

Formula: (Salary + Bonus) × Fully Loaded Rate + Recruiting Cost + Ramp Loss

Note: This is the true economic cost to the company. Salary alone is ~$252K (59% of total).

Offer Recommendation Template

# Compensation Analysis: [Role] — [Name/Candidate ID]

**Date:** [YYYY-MM-DD]
**Role:** [Title, Level]
**Location:** [City / Remote]

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## Market Benchmarks

**Data sources:** Levels.fyi (n=45), Radford (n=120 comparable companies), Salary.com

**Market definition:** Series B/C SaaS, 100–300 employees, SF Bay + remote-first

**Salary 50th percentile:** $190–210K (range: $170–230K, 25th–75th)
**Bonus range:** 15–20%
**Equity (annualized):** $75–120K/year

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## Recommendation

**Offer package:**
- Salary: $205K (50–55th percentile, within market)
- Bonus: 18% = $36.9K
- Stock: $100K over 4 years (1-year cliff)
- Start date: [Date]

**Justification:**
- Candidate is strong at technical skills but mid-level on leadership/scope
- Market for this role is tight; recommend slightly above 50th to secure
- Internal equity check: No compression vs. peers at same level

**Cost impact:**
- Fully loaded annual cost: $350K (including benefits, recruiting, ramp)
- Headcount budget: [% of allocated budget for this role]

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## Scenarios

| Scenario | Salary | Equity/yr | Total Comp (Yr 1) |
|----------|--------|-----------|---|
| Conservative offer (45th %ile) | $190K | $70K | $320K |
| **Recommended (50th %ile)** | **$205K** | **$100K** | **$340K** |
| Competitive (60th %ile) | $220K | $120K | $360K |

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## Approval Chain

- [ ] Finance: Budget confirmed
- [ ] Manager: Offer terms approved
- [ ] Legal: Equity terms reviewed (if >$1M)

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Market Data Deep Dive: Levels.fyi Example

Staff Engineer (L3–L4 equivalent)
Tech: Google, Meta, Apple, Microsoft, Amazon

Salary: $180K–$250K (median $215K)
Bonus: 15–30% (median 20%)
Equity: $100K–$300K (median $150K, 4-year vesting)

Total comp range: $295K–$500K+

By location:
- SF Bay: 25th: $280K, 50th: $350K, 75th: $400K
- NYC: 25th: $260K, 50th: $320K, 75th: $380K
- Remote: 25th: $250K, 50th: $300K, 75th: $350K

Red Flags

• Compression detected: New hire earning >3% more than incumbent. Action: Adjust offer or budget for raise.
• Below 25th percentile: May signal budget constraint or role mismatch. Action: Re-evaluate role scope or recruit plan.
• Equity cliff mismatch: High equity with <2 year vesting can create retention cliff. Action: Review vesting terms or communication plan.
• Geographic arbitrage risk: Remote hire at same salary as SF-based peer earning 30% less elsewhere. Action: Document market justification or adjust offer.