Choose an equity methodology for total direct compensation
Equity can be measured in more than one way, so total direct compensation (TDC) lets you choose how the equity portion is valued. You pick an equity methodology (what counts as a year of equity) and a view (Gross or Net). Base salary and target variable pay stay the same whichever you choose.
All three methodologies use original grant value. For what TDC is and where to find it, see the article on benchmarking total direct compensation.
Compare the three methodologies
[Screenshot: Diagram giving an overview of the three TDC equity methodologies]
| Granted in the last 12 months (total) | Granted in the last 12 months (annualized) | Vested in the last 12 months | |
|---|---|---|---|
| How it's counted | Full original value of every grant made in the last 12 months | Same grants, valued at one year's worth of vesting (a $100k grant over 4 years counts as $25k) | Original value of equity that vested in the last 12 months, across all grants regardless of grant date |
| Best for | Comparing to traditional compensation surveys, sizing equity awards, and evaluating all-in compensation regardless of vesting | Annual run-rate views and comparing different vesting schedules | What employees actually earned, retention, and tenured-employee analysis |
| Keep in mind | Multi-year new hire grants count in full, so values can run well above one year of pay | Assumes even vesting, so front- or back-loaded schedules aren't reflected | Cliffs are smoothed, values use grant-date price, and samples may be smaller |
One employee, three answers
Here's how each methodology values the same employee. The employee earns $125k in base salary and received three grants, each worth $100k and vesting over 4 years: in July 2024, April 2025, and April 2026. The 12-month window is 2026.
| Methodology | Equity counted | TDC |
|---|---|---|
| Granted in the last 12 months (total) | The full $100k April 2026 grant. The earlier grants fall outside the window. | $225k |
| Granted in the last 12 months (annualized) | One year of the April 2026 grant ($100k ÷ 4 years = $25k) | $150k |
| Vested in the last 12 months | $25k from the July 2024 grant, $25k from the April 2025 grant, and $16.7k from the April 2026 grant | $191.7k |
The granted methodologies only look at grants made in the window. The vested methodology looks at every grant that vested during the window, no matter when it was granted.
Choose Gross or Net
- Gross: The number of shares multiplied by the share price.
- Net: The number of shares multiplied by the share price minus the exercise price. This mainly affects stock options.
Change the methodology or view
The default is Gross and Granted in the last 12 months (total).
To change them, use the View equity as and Equity methodology dropdowns above the TDC table. You can also select Settings, update the TDC settings in the Roll-up section, and select Apply settings.
[Screenshot: Equity methodology dropdown above the TDC table, showing the three options and their descriptions]
When you include TDC in a Market Data report, you can select both views and more than one methodology. Each combination appears as its own section in the export.
How Pave values equity in TDC
Original grant value: All TDC equity values are based on the share price when the grant was made. That's the most recent funding round for private companies, or the public share price for public companies. Changes in share price after the grant date are not reflected.
Smoothed vesting: For the vested methodology, Pave treats vesting as happening evenly each month over a grant's vesting schedule, so a vesting cliff doesn't create a one-time spike in value. For example, 18 months ago an employee received a $120k grant that vests over 4 years with a 1-year cliff. Pave spreads the grant evenly at $2,500 per month ($120k ÷ 48 months), so the employee's vested value for the last 12 months is $30k. On the employee's actual schedule, $30k vested all at once at month 12, then $2,500 each month after that.
How TDC equity differs from other equity benchmarks
The TDC equity methodologies are separate from the settings for new hire equity, ongoing equity, and unvested equity:
- TDC counts both new hire and ongoing grants, but only within a 12-month window.
- New hire equity counts new hire grants from the past 24 months.
- Ongoing equity counts grants from the past 12 months, but excludes new hire grants.
Changing a TDC setting doesn't change the other equity tables, and their settings don't change TDC. For the settings available on other equity benchmarks, see Equity data benchmarking.