How to read a job offer document beyond the base salary

A friend forwarded me her offer letter last month, thrilled about a $145,000 base. Buried on page three: a one-year cliff on her equity, a "discretionary" bonus, and a non-compete that would have made her next move harder than her current one. The base was real. Almost nothing else was what she thought.

An offer letter is a marketing document with legal teeth. HR writes it to make the number on line one feel like the whole story. It isn't. Here is what actually moves the number, and how to read for it before you sign.

Bonus language is where most of the fiction lives

There are two words that do enormous work in an offer letter: target and discretionary. A "target bonus of 15%" on a $120,000 base sounds like $18,000. It is not a promise of $18,000. It is a ceiling framed as a floor. If the company misses its numbers, or your manager decides your quarter was fine but not exceptional, that 15% becomes 8%, or zero.

Ask for the last three years of actual bonus payout as a percentage of target, company-wide. Real companies track this. If the answer is "we don't share that," the answer is really "we don't want to share that," and you should assume the historical payout is well under 100% of target.

Also read for the vesting condition on the bonus itself. Many offers require you to be employed on the payout date — often March of the following year — to receive the bonus for work you already did. Leave in February, and a $15,000 bonus you earned in Q4 evaporates. That's not a bug; it's a retention mechanic.

Equity is a schedule, not a number

If the offer says "$80,000 in RSUs" or "10,000 options," the first question is: over what period, and on what schedule?

The standard is four years with a one-year cliff, then monthly or quarterly vesting. That means if you leave at month eleven, you get nothing. At month thirteen, you get 25%. The "$80,000 in RSUs" is really $20,000 a year, taxed as ordinary income at vest, on a stock price that may or may not resemble the one they used to calculate the grant.

For private companies, options are worse than they look on paper. The strike price matters. The 409A valuation matters. The exercise window when you leave — often 90 days — matters enormously, because exercising can cost you tens of thousands out of pocket in cash plus taxes on paper gains for a stock you cannot sell. Ask for the strike price, the current 409A, the total shares outstanding (so you can calculate your actual percentage), and the post-termination exercise window in writing.

A grant of 10,000 options at a $5 strike, in a company with 100 million shares outstanding, is 0.01% of the company. If they exit at $1 billion, that is $100,000 minus your $50,000 exercise cost minus taxes. Over four years. Do the math before it feels like a lottery ticket.

Benefits are compensation, and they vary by five figures

Health insurance premiums, employer 401(k) match, PTO accrual, and parental leave are all cash. Priced out:

• A 6% 401(k) match on a $130,000 salary is $7,800 per year. A 3% match is $3,900. That $3,900 gap is real money that compounds.
• An employer paying 100% of a family health premium versus 70% is often a $6,000–$10,000 annual difference.
• 15 PTO days versus 25 is roughly 4% of your salary in unpaid-for time off. On $130,000, that's about $5,000.
• "Unlimited PTO" usually means employees take less time off than accrual-based plans, and you get zero payout when you leave. It is a cost-saving policy dressed as a perk.

Add it up. Two offers with the same base can be $15,000–$20,000 apart in total compensation once benefits are priced correctly.

The clauses that constrain your next job

Read the non-compete, non-solicit, and IP assignment clauses before you read the salary again. These affect what you can do after this job, which affects your leverage for the rest of your career.

Non-competes are unenforceable in California and increasingly restricted elsewhere, but companies still include them because most employees self-enforce out of fear. A broad IP assignment clause can claim ownership of side projects you build on your own time. A non-solicit can stop you from hiring former coworkers at your next company for a year or two.

If any of these clauses are broader than "during your employment," push back in writing before signing. This is easier before you sign than after.

"I'm excited about the offer. Before I sign, I want to align on a couple of items in the paperwork. Can we narrow the non-compete to direct competitors in the same product category, and limit it to twelve months? And can we carve out an exception in the IP assignment clause for personal projects developed outside work hours on personal equipment? I'm happy to put both in writing."

That's the whole script. Send it as a reply to the recruiter. The worst they say is no, and now you know something about the company.

Severance and the exit terms nobody negotiates upfront

The best time to negotiate severance is before you're hired, when you have leverage. The worst time is when you're being walked out. Ask what the standard severance is for a role at your level in a non-cause termination. "Two weeks per year of service, with a two-month minimum, and accelerated vesting of any equity that would have vested in that period" is a reasonable ask for a senior role. Junior roles rarely get this, but senior candidates who don't ask leave money on the table every time.

Also look for a "change of control" clause on equity. If the company is acquired, does your unvested equity accelerate? Single-trigger acceleration (accelerates on acquisition alone) is rare and generous. Double-trigger (accelerates on acquisition and termination within 12 months) is standard and worth asking for if it isn't there.

Before you reply to the offer email, open a spreadsheet and put base, expected bonus (at 70% of target, not 100%), annualized equity value, 401(k) match in dollars, and PTO in dollars in five rows. Total them. That number, not the base, is what you're being offered — and it's the number you should be negotiating against.