I started my career is software engineering in 2020. Over the years, here’s what my base salary progression has looked like:

Amazon (2020): $112,000

Microsoft (2021): $123,000

Google (2022): $169,000

I didn’t major in math but those jumps seem a lot more than a 7% year-to-year salary bump. Here’s a deeper breakdown on what people don’t talk about between the three.

The Three Compensation Categories

In most software engineering offer packages at big tech companies, the compensation packages follows the following structure

Base Salary

The base salary is your yearly take home salary before taxes. Most companies offer just a base salary for your role. This is usually paid every two weeks, twice a month, or once a month.

Sign-On Bonus

Sign-On bonuses are usually one-time payments to new hires for joining the company. Companies need that extra incentive to get you to switch over. This usually has a 1 year commitment and if you leave before 1 year you have to pay back either the full amount or a pro-rated amount.

Equity

Equity is a complicated topic and deserves an article on its own. A company will promise to give you a certain amount of company stock but when you get it depends on your offer. It’s usually 25% every year for 4 years and eventually runs out.

If a company gives you $100,000 and distributes 25% every year for 4 years, expect $25,000 worth of company stock in your stock brokerage on your 1 year work anniversary.

Performance Bonus

The tech offer might include a performance bonus that is given to the employee once a year every year. It’s always subjective and depends on your performance and the budget. I’ve only ever seen it be between 0% and 20%.

Now you know when engineers are sharing their total compensation, it generally includes:

Base Salary + Sign-On + (Total Equity)/4 + Average Performance Bonus