Separate facts from scenario assumptions
| Input | Role | Verification |
|---|---|---|
| Unvested face value | Starting amount potentially forfeited | Check grant documents |
| Vest probability | User scenario for reaching vesting | Not an empirical forecast |
| Realizability | User scenario for realizable value | Not a market-price forecast |
| Compensation increase | Entered annual gain from moving | Check offer basis |
| Horizon and switching costs | Time and friction in the comparison | Use one consistent horizon |
Worked example: monetary break-even at 36 months
| Layer | Calculation | Result |
|---|---|---|
| Risk-adjusted forfeiture | 60,000 × 75% × 100% | 45,000 |
| Horizon compensation gain | 15,000 × 36 ÷ 12 | 45,000 |
| Switching costs | Entered amount | 0 |
| Net leaving advantage | 45,000 − 45,000 − 0 | 0 |
| Break-even time | 45,000 ÷ 15,000 × 12 | 36 months |
Retest uncertainty and costs one input at a time
A lower vest probability or realizability reduces the adjusted forfeiture. Higher switching costs increase the compensation gain needed to break even. These are entered scenarios, not recommendations.
Verify the compensation facts separately
- Confirm grant, vesting and forfeiture terms.
- Keep face value separate from realizable value.
- Check liquidity, tax and legal consequences outside the model.
- Compare career, wellbeing and risk without forcing them into invented money values.
How the Golden Handcuffs calculation works
netLeavingAdvantage = annualCompIncrease × horizonMonths ÷ 12 − riskAdjustedForfeiture − switchingCosts
- netLeavingAdvantage
- Net leaving advantage
- unvestedFaceValue
- Unvested face value
- vestProbability
- Vest probability
- realizability
- Realizability factor
- annualCompIncrease
- Annual compensation increase
- horizonMonths
- Comparison horizon
- switchingCosts
- Switching costs
The calculator and article use this relationship consistently; the article does not reimplement the calculation.
riskAdjustedForfeiture = unvestedFaceValue × vestProbability × realizability
- riskAdjustedForfeiture
- Risk-adjusted forfeiture
- unvestedFaceValue
- Unvested face value
- vestProbability
- Vest probability
- realizability
- Realizability factor
- annualCompIncrease
- Annual compensation increase
- horizonMonths
- Comparison horizon
- switchingCosts
- Switching costs
The calculator and article use this relationship consistently; the article does not reimplement the calculation.
breakEvenMonths = (riskAdjustedForfeiture + switchingCosts) ÷ annualCompIncrease × 12
- breakEvenMonths
- Break-even months
- unvestedFaceValue
- Unvested face value
- vestProbability
- Vest probability
- realizability
- Realizability factor
- annualCompIncrease
- Annual compensation increase
- horizonMonths
- Comparison horizon
- switchingCosts
- Switching costs
The calculator and article use this relationship consistently; the article does not reimplement the calculation.
60,000 face value at 75% probability and a 15,000 annual compensation increase.
Inputs used in the Golden Handcuffs worked example
| Input | Entered value | What it represents | Source class |
|---|---|---|---|
| Unvested face value | 60,000 currency units | Current face value of compensation that may be forfeited. | user assumption |
| Vest probability | 0.75 probability | Your assumed probability of vesting, entered as a decimal. | user assumption |
| Realizability factor | 1 share | Your assumed share of face value that may be realized. | user assumption |
| Annual compensation increase | 15,000 currency units/year | Expected annual compensation increase in the leave scenario. | user assumption |
| Comparison horizon | 36 months | Months over which to compare the compensation increase. | user assumption |
| Switching costs | 0 currency units | One-time costs assigned to leaving. | user assumption |
Worked example: Golden Handcuffs
The calculator normalizes the inputs above, applies Net leaving advantage, and returns the outputs below. The displayed result is therefore reproducible in the linked calculator.
| Measure | Result | Interpretation |
|---|---|---|
| Net leaving advantage | 0 currency units | Horizon compensation gain minus risk-adjusted forfeiture and switching costs. |
| Risk-adjusted forfeiture | 45,000 currency units | Face value multiplied by entered vest probability and realizability. |
| Break-even months | 36 months | Months needed for the annual increase to offset forfeiture and costs; zero means no positive annual increase. |
Interpret the result and test Vest probability
- Net leaving advantage: 0 currency units. Horizon compensation gain minus risk-adjusted forfeiture and switching costs.
- Risk-adjusted forfeiture: 45,000 currency units. Face value multiplied by entered vest probability and realizability.
- Break-even months: 36 months. Months needed for the annual increase to offset forfeiture and costs; zero means no positive annual increase.
| Result | Baseline | Changed-input scenario | How to read it |
|---|---|---|---|
| Net leaving advantage | 0 currency units | -4,500 currency units | Horizon compensation gain minus risk-adjusted forfeiture and switching costs. |
| Risk-adjusted forfeiture | 45,000 currency units | 49,500 currency units | Face value multiplied by entered vest probability and realizability. |
| Break-even months | 36 months | 39.60 months | Months needed for the annual increase to offset forfeiture and costs; zero means no positive annual increase. |
Checks that are specific to Golden Handcuffs
- The worked example is calculated through the same shared-work-logic engine as the planner.
- Non-finite and out-of-range assumptions return an input error.
- Result cards, trace, CSV, PDF and methodology bind to named engine result fields.
What this Golden Handcuffs guide includes and excludes
- Vest probability and realizability are explicit user assumptions.
- Annual compensation increase remains constant over the horizon.
Sources and method boundary
- ilostat.ilo.org context for the market-neutral method boundary — ilostat.ilo.org (accessed 2026-07-28): Context for the market-neutral time and earnings boundary; the calculator and methodology define the canonical calculation method.
- www.ilo.org context for the market-neutral method boundary — www.ilo.org (accessed 2026-07-28): Context for the market-neutral time and earnings boundary; the calculator and methodology define the canonical calculation method.
- Golden Handcuffs methodology — Wage101 (accessed 2026-07-28): Canonical formulas, units, validation, calculator behavior and limitations.