Separate document facts from personal assumptions
| Input | Role | Treat as |
|---|---|---|
| Grant estimate | Starting headline amount entered by the user | Document fact only if supported by the offer |
| Vesting years | Spreads the estimate onto an annual basis | Grant-term input |
| Expected vested share | Reduces the amount for the user-entered vesting scenario | Personal scenario assumption |
| Realizability share | Reduces the vested scenario for realizability | Explicit assumption, not a forecast |
| Cash foregone | Compares expected annual value with entered cash trade-off | Offer-comparison input |
Worked example: face value, uncertainty and cash
| Layer | Calculation | Result |
|---|---|---|
| Annualised face value | 120,000 ÷ 4 years | 30,000 |
| Expected scenario value | 120,000 × 75% × 80% ÷ 4 | 18,000 |
| Risk discount | 30,000 − 18,000 | 12,000 |
| After cash foregone | 18,000 − 15,000 | 3,000 |
Test realizability without pretending to forecast it
The rows below change only the user-entered realizability share. They show arithmetic sensitivity, not probabilities or estimates of what the equity will be worth.
| Illustrative realizability input | Annual expected scenario | After 15,000 cash foregone |
|---|---|---|
| 50% | 11,250 | −3,750 |
| 80% baseline | 18,000 | 3,000 |
| 100% | 22,500 | 7,500 |
Check instrument-specific facts outside this model
- Verify vesting conditions and grant terms in the offer documents.
- Review liquidity and exercise constraints with the appropriate instrument-specific tool.
- Do not infer future prices, dilution or realizability from this scenario.
- Check taxes and legal terms separately.
- Use the RSU vesting or stock-option offer tool when those instrument details matter.
How the Equity Compensation Value Calculator calculation works
annualizedExpectedValue = estimatedGrantValue × expectedVestedRate × realizabilityRate ÷ vestingYears
- annualizedExpectedValue
- Annualised expected value
- estimatedGrantValue
- Estimated grant value
- expectedVestedRate
- Expected vested share
- realizabilityRate
- Realizability share
- vestingYears
- Vesting years
The calculator and article use this relationship consistently; the article does not reimplement the calculation.
annualizedFaceValue = estimatedGrantValue ÷ vestingYears
- annualizedFaceValue
- Annualised face value
- estimatedGrantValue
- Estimated grant value
- vestingYears
- Vesting years
- expectedVestedRate
- Expected vested share
- realizabilityRate
- Realizability share
- annualCashForegone
- Annual cash foregone
The calculator and article use this relationship consistently; the article does not reimplement the calculation.
annualizedRiskDiscount = annualizedFaceValue − annualizedExpectedValue
- annualizedRiskDiscount
- Annualised risk discount
- estimatedGrantValue
- Estimated grant value
- vestingYears
- Vesting years
- expectedVestedRate
- Expected vested share
- realizabilityRate
- Realizability share
- annualCashForegone
- Annual cash foregone
The calculator and article use this relationship consistently; the article does not reimplement the calculation.
annualizedValueAfterCashForegone = annualizedExpectedValue − annualCashForegone
- annualizedValueAfterCashForegone
- Value after cash foregone
- estimatedGrantValue
- Estimated grant value
- vestingYears
- Vesting years
- expectedVestedRate
- Expected vested share
- realizabilityRate
- Realizability share
- annualCashForegone
- Annual cash foregone
The calculator and article use this relationship consistently; the article does not reimplement the calculation.
A 120,000 estimated grant over four years with 75% expected vesting and 80% realizability.
Inputs used in the Equity Compensation Value Calculator worked example
| Input | Entered value | What it represents | Source class |
|---|---|---|---|
| Estimated grant value | 120,000 currency units | Your estimate of the grant face value. | user assumption |
| Vesting years | 4 years | Years across which the grant vests. | user record |
| Expected vested share | 0.75 decimal rate | Share of the grant you expect to vest. | user assumption |
| Realizability share | 0.8 decimal rate | Share of vested face value you expect to realise. | user assumption |
| Annual cash foregone | 15,000 currency units/year | Annual cash compensation given up for the equity package. | user assumption |
Worked example: Equity Compensation Value Calculator
The calculator normalizes the inputs above, applies Annual expected value, and returns the outputs below. The displayed result is therefore reproducible in the linked calculator.
| Measure | Result | Interpretation |
|---|---|---|
| Annualised expected value | 18,000 currency units/year | Grant value adjusted for vesting and realizability, divided by vesting years. |
| Annualised face value | 30,000 currency units/year | Entered grant value divided by vesting years. |
| Annualised risk discount | 12,000 currency units/year | Face value minus expected value. |
| Value after cash foregone | 3,000 currency units/year | Expected annual value minus entered cash foregone. |
Interpret the result and test Realizability share
- Annualised expected value: 18,000 currency units/year. Grant value adjusted for vesting and realizability, divided by vesting years.
- Annualised face value: 30,000 currency units/year. Entered grant value divided by vesting years.
- Annualised risk discount: 12,000 currency units/year. Face value minus expected value.
- Value after cash foregone: 3,000 currency units/year. Expected annual value minus entered cash foregone.
| Result | Baseline | Changed-input scenario | How to read it |
|---|---|---|---|
| Annualised expected value | 18,000 currency units/year | 19,800 currency units/year | Grant value adjusted for vesting and realizability, divided by vesting years. |
| Annualised face value | 30,000 currency units/year | 30,000 currency units/year | Entered grant value divided by vesting years. |
| Annualised risk discount | 12,000 currency units/year | 10,200 currency units/year | Face value minus expected value. |
| Value after cash foregone | 3,000 currency units/year | 4,800 currency units/year | Expected annual value minus entered cash foregone. |
Checks that are specific to Equity Compensation Value Calculator
- Expected value never exceeds face value.
- Vesting and realizability shares stay between zero and one.
- Non-positive grant value or vesting years return an input error.
What this Equity Compensation Value Calculator guide includes and excludes
- Grant value is supplied by the user.
- Vesting and realizability are scenario probabilities.
- No tax or dilution is modelled.
Sources and method boundary
- Equity Compensation Value Calculator methodology — Wage101 (accessed 2026-07-27): Canonical formulas, units, validation, calculator behavior and limitations.