Equity Compensation Calculator

An equity grant letter states a number of units, not a dollar value you can spend. Whether that grant is restricted stock units, stock options or a discounted purchase plan changes what it is worth, when it is taxed, and what cash you need to unlock it. This calculator values all four types in one place: current value, projected value at full vesting, the cost to exercise or buy, the first year’s vesting tranche, and an after-tax estimate at the rate you enter.

Quick Answer

How to use the equity compensation calculator

Pick your equity type, enter the grant, and click Calculate. Results stay hidden until you calculate, and Reset returns every field to the pre-filled RSU example.

1. Equity type: RSU, NSO, ISO or ESPP. The type changes the formula, the cost line and the tax note.
2. Grant: units granted and current share price. For private companies, use the latest 409A valuation as the price.
3. Type-specific fields: strike price for options, ESPP discount for ESPP. Fields that do not apply to your type are ignored.
4. Projection: vesting period, assumed annual price growth and your estimated combined tax rate.

The tool rejects blank or negative entries, a zero unit count, price or vesting period, and any ESPP discount or tax rate above 100 percent, each with a plain message. Copy my results and Share results in the results box pass on the after-tax headline and the breakdown lines. This page values grants and options. It is a different question from dividend income: if you want the cash return on shares you already own, our equity dividend rate calculator covers that cash-on-cash return, while this page covers what an unvested grant is worth.

RSUs versus options versus ESPP: the one-paragraph version

RSUs are shares promised to you; options are the right to buy shares at a fixed price; ESPP is a discounted purchase plan. RSUs always have value once they vest. Options only pay if the share price beats the strike price. ESPP locks in a discount, usually 15 percent, on every purchase. That single distinction decides most of the planning: RSUs are lower risk, options offer more leverage, ESPP is nearly free money if you sell promptly. Equity also sits on top of your cash pay, so compare the grant against your salary with our base compensation calculator before deciding whether an offer is actually generous.

Formulas: what the tool actually computes

Every figure on this page comes from a short chain. First the projected share price compounds the current price at your growth assumption over the vesting period. Then each type turns that price into a value, and the tax line applies your entered rate to the projected value.

Three simplifications are stated here rather than hidden. First, options are valued at intrinsic value only: the spread, floored at zero. A full option-pricing model would add time value, so an unvested option with years left is worth more in theory than the spread shows, and an underwater option is not literally worthless until it expires. The spread is the right number for the exercise decision, which is what most holders actually need. Second, the after-tax line uses one combined rate for every type. That is a reasonable planning shortcut for RSUs and NSOs, but a qualifying ISO disposition is taxed as capital gain, which may be well below your entered rate, and AMT can add a bill in the exercise year that this line does not model. Third, ESPP discounts here off the current price only. Many qualified plans use a lookback to the lower of the offering-start or purchase price, which increases the real discount when the stock rose during the offering period. If your plan has a lookback, this tool understates the ESPP value, so check your plan document.

The year-1 tranche assumes equal annual vesting: units divided by vesting years, valued at the year-1 price. Real schedules often have a 1-year cliff, where nothing vests until the first anniversary and then a full year’s portion vests at once. The dollar figure for the first year is the same either way under equal vesting; the cliff changes when you can touch it, not how much the first tranche is worth. If your schedule is back-loaded or front-loaded, the tranche line will not match it.

Worked example: 1,000 RSUs at $85, then the same numbers as options and ESPP

The pre-filled calculator uses 1,000 RSUs at $85, a $60 strike, a 15 percent ESPP discount, a 4-year vest, 8 percent growth and a 32 percent tax rate. Running it as an RSU gives the following lines, verified against the tool itself: current value 1,000 × $85 = $85,000; projected share price after 4 years at 8 percent is $85 × 1.08^4 = $115.64, so projected value = $115,642; after 32 percent tax = $78,636; the first year’s tranche (250 units) projects to 250 × $91.80 = $22,950.

Change only the type and the same grant tells three different stories. As NSOs with the $60 strike, the current spread value is 1,000 × ($85 − $60) = $25,000, but exercising costs $60,000 out of pocket, and the projected value is $55,642, or $37,836 after tax. As ESPP with the 15 percent discount, the purchase cost today is $72,250, the current discount value is $12,750, and the projected value is $17,346, or $11,795 after tax. The cash requirement is the part option holders underestimate: the NSO value is real, but you have to buy it first, and you owe tax on the spread at exercise whether or not you sell.

The year-1 tranches complete the comparison: $22,950 for the RSU, $7,950 for the NSO (250 × ($91.80 − $60)), and $3,443 for the ESPP (250 × the $13.77 year-1 discount per share). A grant that looks equal on paper pays out on very different schedules once type, strike and discount are accounted for.

How each type is taxed

The IRS treats each type differently, and the IRS Topic 427 page on stock options is the starting point for the statutory versus nonstatutory distinction. RSUs are ordinary income at vesting, based on the fair market value of the shares. NSO spreads are ordinary income at exercise. ISOs can qualify for capital gains treatment with the right holding periods, and ESPP discounts have their own qualifying-disposition rules. The details decide thousands of dollars, and our after-tax yield calculator helps compare what you keep across choices.

Two traps stand out. First, RSU withholding at vesting is often a flat 22 percent federal supplemental rate, which under-withholds for high earners and produces an April surprise: withholding is not your final tax. Second, ISOs look tax-free at exercise but can trigger alternative minimum tax, which is a real cash bill on money you have not received. ISOs also face a $100,000 annual limit on the grant-date value first becoming exercisable, and a qualifying disposition needs more than 2 years from grant and more than 1 year from exercise. Sell earlier and the spread becomes ordinary income as a disqualifying disposition. For ESPP, a qualifying disposition needs more than 2 years from the offering date and more than 1 year from the purchase date; otherwise the discount is ordinary income. When in doubt, model the exercise with a professional before the year ends. When you do sell vested shares, our stock sell calculator and capital gains loss calculator cover the sale itself.

Five mistakes that cost people real money

1. Treating withholding as the tax bill. The 22 percent supplemental withholding on RSU vesting is a down payment, not the rate. High earners routinely owe more at filing.
2. Exercising ISOs without modeling AMT. The spread counts for AMT in the exercise year even if you hold the shares. A large exercise can create a five-figure bill with no sale proceeds to pay it.
3. Ignoring the exercise cash. NSOs need strike times options in cash, plus tax on the spread. A $25,000 spread that costs $60,000 to unlock is a financing decision, not just a valuation.
4. Leaving before the cliff or the exercise window. Unvested equity is almost always forfeited, and vested options commonly must be exercised within 90 days of departure or they expire. Check both dates before resigning.
5. Holding everything in one company. You already paid ordinary income tax on vested RSU value, so selling diversifies without extra tax cost on that value, and holding concentrates both your paycheck and your portfolio in one company. The exception is a genuine conviction holding with a plan, not inertia.

What competing calculators miss

Most equity calculators multiply units by price and stop, which values an option grant exactly like an RSU grant and gets the option value completely wrong. They ignore the strike price, the cost to exercise, vesting tranches and taxes, which are the four things that decide what you actually keep. None explain the ISO holding periods or the AMT trap. Other patterns in this search are weaker still: valuation-times-percentage tools answer a founder’s ownership question, not an employee’s grant question, and single-type tools force you to run a different calculator for each grant type you hold. This page models all four equity types with their real mechanics, shows the exercise cash beside the value, breaks out the first year’s tranche, and states its simplifications (intrinsic value only, one combined tax rate, no ESPP lookback) instead of presenting a single number as the answer.

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