## Help me with my job offers

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Topic Author
mooudn
Posts: 90
Joined: Sun Jan 05, 2020 10:28 am

### Help me with my job offers

Hi..I have a good problem to solve...

I'm in the midst of a job change and have two competing offers from two companies with different pay structures. One pays a yearly bonus while the other does not..instead it compensates overtime. For comparison of offers on a purely monetary basis, I'm calculating the equivalent salary of Company B that would be equal to the total compensation of Company A. This assumes that I'd get paid a bonus of 30K per year by Company A and I would work \$5k worth of overtime with Company B. Calculating the equivalent base salary of Company B would assist me in the decision making process.

Company A:
Salary: \$109k base salary with estimated 20k-40k bonus per year
Overtime pay: No

Company B:
Salary: ??? (find equivalent to evaluate job offer against Company A)
Overtime pay: Yes (estimated \$5k per year)

***********
Calculations:

Bonus = 30k*(100-38.29%) = \$18,513
Total biweekly compensation of Company A= \$3068+(18,513/26) = \$3,780

The equivalent salary for Company B would be (\$130k per year which equates to roughly \$3,780 biweekly)

************

Am I leaving anything out from my calcs? Am I correct to assume that the bonus will be taxed at my higher bracket tax rate of 38.9%? In general, which pay structure is best? I'm not familiar with bonus pay.

Thanks
hi_there
Posts: 207
Joined: Sat Aug 29, 2020 7:00 pm

### Re: Help me with my job offers

Your bonus is taxed the same as normal income. However, it is usually withheld at a higher rate - and you get the difference back as a tax refund.
GT99
Posts: 397
Joined: Wed Jun 20, 2018 5:26 pm

### Re: Help me with my job offers

Consider each salary \$ to be more valuable than each bonus \$. How much more is hard to say without knowing the bonus criteria, company history of paying it, etc.
In your example, I would likely consider \$130k base + OT to be a better offer than \$109k with \$20k-40k bonus and no OT, all other things being equal.
One reason companies like using bonuses is that if they have a bad year, they can cut bonuses without cutting salaries. That said, in the 10 or 11 years I worked where I had a bonus structure, that only happened to me once (I think I still got like 60% bonus). All other years, my bonuses averaged over 100% of target.
Ultimately, it's hard to give a specific answer without knowing the likelihood of hitting your full bonus. If you have enough info to estimate that, a simple way to calculate it would be:

Salary + (Target Bonus * % Likelihood)*0.95 + Project OT pay

I'm taking 5% off of the bonus because when it's salary, you're not waiting all year to collect it. It's not perfect, but it's simple way to look at it.
Topic Author
mooudn
Posts: 90
Joined: Sun Jan 05, 2020 10:28 am

### Re: Help me with my job offers

GT99 wrote: Tue Jan 12, 2021 9:38 pm Consider each salary \$ to be more valuable than each bonus \$. How much more is hard to say without knowing the bonus criteria, company history of paying it, etc.
In your example, I would likely consider \$130k base + OT to be a better offer than \$109k with \$20k-40k bonus and no OT, all other things being equal.
One reason companies like using bonuses is that if they have a bad year, they can cut bonuses without cutting salaries. That said, in the 10 or 11 years I worked where I had a bonus structure, that only happened to me once (I think I still got like 60% bonus). All other years, my bonuses averaged over 100% of target.
Ultimately, it's hard to give a specific answer without knowing the likelihood of hitting your full bonus. If you have enough info to estimate that, a simple way to calculate it would be:

Salary + (Target Bonus * % Likelihood)*0.95 + Project OT pay

I'm taking 5% off of the bonus because when it's salary, you're not waiting all year to collect it. It's not perfect, but it's simple way to look at it.
So would Project OT pay just be zero in your equation? Company A does not pay overtime at all.

Company B matches 5% for retirement account while company A matches 4%. I personally like the fact that company B pays overtime to full time employees as it shows there is some accountability in their systems for not exploiting employee time in hopes of a promised bonus.

It's hard for me to estimate the %likelihood of bonus pay due to lack of insight into their history. However, a friend who works for them as a contractor and wasnt expecting a bonus got 10k this year. Glassdoor reviews state that the company over promises on bonuses and under delivers on them with an average bonus pay of 7k/yr. However, I do not know how many data points that is based on and I wonder if glassdoor is skewed towards those having something bad things to say about the company. People who receive a good bonus are less inclined to write a glassdoor review.

Also, something else that I'm considering is the possibility of me moving companies (countries) again in a year so it might be easier to do so if I stay with current employer to show more continuity in my resume. On top of that it usually takes more energy/stress to switch to a new company for at least the first 6 months because you have to learn their new systems, means and methods.

Having said all the above, using your equation with 20% likelihood (which is probably too conservative) I get:

109+(40K*0.2)*0.95+0 = \$117k
rich126
Posts: 2315
Joined: Thu Mar 01, 2018 4:56 pm

### Re: Help me with my job offers

Maybe I'm weird but I am usually interested in other things than just salaries when it comes to companies. I've never had 2 offers where the only thing different was the salary. Usually management, benefits, location, the actual job, etc. adds up to more than the salary.
carolinaman
Posts: 4434
Joined: Wed Dec 28, 2011 9:56 am
Location: North Carolina

### Re: Help me with my job offers

rich126 wrote: Wed Jan 13, 2021 9:44 am Maybe I'm weird but I am usually interested in other things than just salaries when it comes to companies. I've never had 2 offers where the only thing different was the salary. Usually management, benefits, location, the actual job, etc. adds up to more than the salary.
+1. I totally agree. There are many factors in a job aside from compensation.
Topic Author
mooudn
Posts: 90
Joined: Sun Jan 05, 2020 10:28 am

### Re: Help me with my job offers

carolinaman wrote: Wed Jan 13, 2021 10:15 am
rich126 wrote: Wed Jan 13, 2021 9:44 am Maybe I'm weird but I am usually interested in other things than just salaries when it comes to companies. I've never had 2 offers where the only thing different was the salary. Usually management, benefits, location, the actual job, etc. adds up to more than the salary.
+1. I totally agree. There are many factors in a job aside from compensation.
How I see it is that I can be an engineer anywhere...I might as well follow the \$\$\$
Topic Author
mooudn
Posts: 90
Joined: Sun Jan 05, 2020 10:28 am

### Re: Help me with my job offers

update: current employer counter offered 110k base with overtime pay (above 37.5 hr week) and 5% retirement matching. They're also flexible with work location.

Company A didn't offer to raise base much, 106k with an upfront signing bonus of 10k (as part of total compensation bonus for good faith), no overtime (40 hr work week) and 4% retirement matching. They are a little old schooled and like you to work from office as much as possible. They emphasized that their quoted 20k-40k year end bonus pay history is reliable and most staff are not disappointed. They even offered that I speak to someone I kind of know at the firm to double check. Glassdoor reviews say otherwise.

On paper Company A wins..their benefit is the year end bonus which rewards hard work and long hours. I feel like I should take Company A's offer given that my employer has been recently bought out and some uncertain times could be ahead. On the other hand, my end goal is to move to Aus and staying put with current firm could be smart resume-wise.

My gut says not to leave employer because I've gotten really good vibes from my new manager at current firm and it feels like a family. Company A not so much. Should I rely on my gut feeling? or has Covid just made me feeling lazy to the point that I don't want a major job change on top of a city change on top of going into the office like normal times?
simas
Posts: 843
Joined: Wed Apr 04, 2007 5:50 pm

### Re: Help me with my job offers

mooudn wrote: Tue Jan 12, 2021 7:28 pm Hi..I have a good problem to solve...

I'm in the midst of a job change and have two competing offers from two companies with different pay structures. One pays a yearly bonus while the other does not..instead it compensates overtime. For comparison of offers on a purely monetary basis, I'm calculating the equivalent salary of Company B that would be equal to the total compensation of Company A. This assumes that I'd get paid a bonus of 30K per year by Company A and I would work \$5k worth of overtime with Company B. Calculating the equivalent base salary of Company B would assist me in the decision making process.

Company A:
Salary: \$109k base salary with estimated 20k-40k bonus per year
Overtime pay: No

Company B:
Salary: ??? (find equivalent to evaluate job offer against Company A)
Overtime pay: Yes (estimated \$5k per year)

***********
Calculations:

Bonus = 30k*(100-38.29%) = \$18,513
Total biweekly compensation of Company A= \$3068+(18,513/26) = \$3,780

The equivalent salary for Company B would be (\$130k per year which equates to roughly \$3,780 biweekly)

************

Am I leaving anything out from my calcs? Am I correct to assume that the bonus will be taxed at my higher bracket tax rate of 38.9%? In general, which pay structure is best? I'm not familiar with bonus pay.

Thanks
you are putting way too much weight on bonus - it is not guaranteed in any way (unlike base). I prefer compare base pay to base pay, may be being aware of retirement match (which also could change). I ignore bonus for sake of these calculations as that is completely outside of your control
bogledogle
Posts: 372
Joined: Wed May 07, 2014 4:34 pm

### Re: Help me with my job offers

Base pay > Bonus pay > Overtime

Bonus is usually not guaranteed.
Overtime should not factor into your calculations when comparing choices. Why would you want to work more to get paid the same?
Thegame14
Posts: 1794
Joined: Mon May 07, 2018 11:53 am

### Re: Help me with my job offers

mooudn wrote: Wed Jan 13, 2021 4:10 pm
carolinaman wrote: Wed Jan 13, 2021 10:15 am
rich126 wrote: Wed Jan 13, 2021 9:44 am Maybe I'm weird but I am usually interested in other things than just salaries when it comes to companies. I've never had 2 offers where the only thing different was the salary. Usually management, benefits, location, the actual job, etc. adds up to more than the salary.
+1. I totally agree. There are many factors in a job aside from compensation.
How I see it is that I can be an engineer anywhere...I might as well follow the \$\$\$
NEVER follow the \$\$\$... follow the work life balance and good people...
greg24
Posts: 3970
Joined: Tue Feb 20, 2007 10:34 am

### Re: Help me with my job offers

mooudn wrote: Wed Jan 13, 2021 4:10 pmHow I see it is that I can be an engineer anywhere...I might as well follow the \$\$\$
You have several lucrative options, which makes me think you can base your choice on something other than \$\$\$.
rich126
Posts: 2315
Joined: Thu Mar 01, 2018 4:56 pm

### Re: Help me with my job offers

mooudn wrote: Wed Jan 13, 2021 4:10 pm
carolinaman wrote: Wed Jan 13, 2021 10:15 am
rich126 wrote: Wed Jan 13, 2021 9:44 am Maybe I'm weird but I am usually interested in other things than just salaries when it comes to companies. I've never had 2 offers where the only thing different was the salary. Usually management, benefits, location, the actual job, etc. adds up to more than the salary.
+1. I totally agree. There are many factors in a job aside from compensation.
How I see it is that I can be an engineer anywhere...I might as well follow the \$\$\$
I don't know how long you've been an engineer and where you've worked but I wonder if a statement like that simply means that maybe you haven't ever had a really good/satisfying job. Or maybe have been lucky to never had a bad job.

I had a job when I started out where I worked with people of similar age and we had tons of fun at work and out of work. We also had interesting work. Some of that stuff is beyond a company's control (i.e., they don't just group everyone of a similar age, it just was a new office) but other stuff isn't.

Companies can be pro WFH, flexible hours, 40 hr weeks, 60+ weeks, interesting work, tedious work, good/bad management, etc.

Maybe in your case you work from home and nothing else much matters other than salary but most of the time other stuff factors in more than money.

I have a tentative offer to go back east. My main interest in going would be to be close to family (father is getting up there in age), job security and hopefully interesting work. I've had contact from other companies offering substantially more money 30-50% but there are trade offs. Moving right now isn't high on my list of desirables despite wanting to get close to family. Ideally if things were fairly equal I'd like to find a WFH job that I like and I think would be stable for 2-4 years to give me max flexibility but that is me.