Present Value of Different Salary Scenarios?
TLDR: How do I compare different compensation structures? Specifically with a mathematical formula.
I work at a small real estate developer (7 people) and my boss has asked me to find out what market salary and bonus structure was for a 2nd year analyst. I don't think he'll be expecting the number I've come up with from my research (way higher than he thinks) and I know he'd rather pay a less than market salary with a bonus that is based on some sort of incentive. However, the only bonus structure I know of that is somewhat incentive based is carried interest. So far these are the scenarios I plan to present to him. Numbers are just an example
-
Market Salary & Bonus: $90K + 18% bonus + no carry
-
Less than Market Salary & Bonus: $83K + 9% bonus + 2.5% carry
-
Less than Market Salary & Bonus: $83K + no bonus + 6% carry
Does anyone know how I can compare the above scenarios to each other? Present value? I've forecasted each of those scenarios over 5 years, including the carry amounts based on the projected net cash flows of 4 deals (assuming exits in years 3 thru 5). The issue with the carry is if my boss chooses the 3rd scenario and I leave at the end of year 3, I still would have made +/-$5000 less than the 1st scenario; and obviously, there should be some sort of "reward" for only getting paid salary for 2 years. At the end of the day the actual figures don't matter as much as the ability to compare all of the scenarios to each other to see if $X in 3 years is worth more than getting paid $X today. Any advice on comparing the scenarios or which scenario is objectively better for my situation would be greatly appreciated.
Considerations:
- My company likes to sell each building we develop within 3 years
- I only plan to work here for another 3-4 years
- I've only worked on one development that has completed construction since working here, and we will begin construction on 3 more by the end of the year
Fugiat vitae est accusantium. Alias quasi dolores eos odit aut soluta amet exercitationem. Voluptas et est praesentium ducimus libero quasi. Iure delectus corporis aut repellendus.
Quisquam consequatur unde sequi praesentium optio hic. Cumque vel illum sed magnam nemo. Occaecati voluptatem fugiat error magni aut esse iste consequuntur.
Aut deserunt aspernatur aut fugiat atque. Cum sit dolorem magni ut pariatur quam rem. Molestias temporibus vero molestias quidem et quod possimus ipsum. Et culpa non architecto inventore repellendus nemo.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...