Understand total direct compensation benchmarks

Total direct compensation (TDC) is calculated from each employee's own pay, not by adding up other benchmarks on the page. This article explains who's included in TDC and why its values can look different from what you'd expect when you compare it to base salary, target total cash, or equity benchmarks.

For what TDC is and where to find it, see the article on benchmarking total direct compensation.

How TDC is calculated

For each employee, Pave adds base salary, target variable pay, and equity value (using the equity methodology you select). Pave then calculates percentiles from those per-employee totals.

TDC benchmarks get their own Consistency Labels, calibrated for TDC rather than borrowed from cash or equity. To learn more, see Understand Consistency Labels.

Who's included

TDC includes only employees who have equity value under the equity methodology you select:

• Granted in the last 12 months (total or annualized): Employees who received at least one equity grant in the last 12 months.
• Vested in the last 12 months: Employees who had equity vest in the last 12 months, from any grant, regardless of when it was granted.

[Screenshot: Diagram showing which employees are included in TDC under the granted and vested methodologies]

Employees with no equity in the window are excluded rather than counted as zero. This means TDC reflects pay for employees who receive equity, and it may run higher than benchmarks that count those employees as zero.

You can also choose whether TDC includes all employees, or only employees with or without variable pay. To do this, use the employee composition setting, which applies to every compensation type on the page.

Why TDC doesn't equal the sum of other benchmarks

The TDC benchmark for a level and percentile usually won't equal target total cash plus an equity benchmark from the same page. This is expected, for three reasons.

1. Each benchmark includes different employees.

• Base salary and target total cash include all employees.
• Variable pay includes only employees who receive variable pay.
• TDC includes only employees with equity in the 12-month window for your selected methodology.

Employee	Base salary	Variable pay	Equity granted or vested in last 12 months	Included in target total cash?	Included in TDC?	Included in new hire or ongoing equity?
A	✔️	✔️	✔️	✔️	✔️	Depends on the details of the equity grants
B	✔️	✔️		✔️		No, no equity
C	✔️		✔️	✔️	✔️	Depends on the details of the equity grants

2. Equity is defined differently. 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 last 12 months, but excludes new hire grants. New hire equity, ongoing equity, and unvested equity each have their own settings, separate from the TDC equity methodology.

3. Percentiles don't add up across different populations. Different employees sit at each percentile of each benchmark. The 50th percentile of TDC isn't the same as the 50th percentile of base salary plus the 50th percentile of equity.

To benchmark total pay, use TDC as a single number. To benchmark one pay element on its own, use that element's benchmark.

Why TDC can be lower than new hire equity

Different populations, time windows, and selection bias can lead to comparisons that seem counterintuitive. For example, in this group of five employees, the TDC median is lower than the new hire equity median:

Employee	Base	Variable pay	New hire equity (grant at hire, last 24 months)	Ongoing equity (refresh grants, last 12 months)	Granted in last 12 months, total (not shown on page)	TDC
A (hired 6 months ago)	$450k	$225k	$20M	-	$20M	$20.7M
B (hired 18 months ago)	$430k	$215k	$18M	-	-	Not included
C (tenured)	$490k	$295k	-	$6M	$6M	$6.8M
D (tenured)	$465k	$280k	-	$5M	$5M	$5.7M
E (tenured)	$440k	$265k	-	$4M	$4M	$4.7M
Median	$450k	$265k	$19M	$5M	$5.5M	$6.3M

The TDC median ($6.3M) is lower than the new hire equity median ($19M). New hire equity is calculated from only two new hires with large grants, while TDC includes four employees. Employee B is in the new hire equity benchmark but not in TDC, because their grant was made more than 12 months ago.

Why granted (total) TDC isn't 3–4 times granted (annualized) TDC

A large part of TDC is target total cash, which stays the same across all three equity methodologies. Only the equity portion changes. So if grants vest over 4 years, the total methodology's equity value may be about 4 times the annualized value, but TDC as a whole won't be.

Why sample sizes differ between methodologies

Each equity methodology includes a slightly different group of employees (see "Who's included" above), so sample sizes can differ between methodologies. The vested methodology may have smaller samples than the granted methodologies.

TDC for executive roles

TDC is available on VP and C-level benchmark pages, with the same equity methodology and view settings. Executives are typically paid differently from other employees. For example, far fewer have new hire equity grants, and ongoing equity tends to be granted more often with shorter vesting schedules. Keep this in mind when you compare TDC with equity benchmarks for executive roles.