Salary and Equity for Coding Jobs - dummies

Salary and Equity for Coding Jobs

By Nikhil Abraham

Salary and equity (an ownership stake in the company) are the most visible and widely used benchmarks when looking for a coding job. Measuring and comparing salaries is easy but doing so with equity can be more complicated. Equity is either granted as common stock, which is an outright ownership stake in the company, or as options, which are the right to purchase for cash an equity stake in the company.

According to the Department of Labor, entry‐level software developers across all companies earn between $60,000 and $80,000 per year. Compensation at startups is similar, with junior software engineers earning $50,000 to $100,000 and up to 0.25 percent in equity.

Compensation data for junior software engineers by Wealthfront. [Credit: Courtesy of wwworks via Fl
Credit: Courtesy of wwworks via Flickr
Compensation data for junior software engineers by Wealthfront.

The greater the risk of joining a company, the more equity you receive. A well‐capitalized and profitable company that pays a market salary will offer far less equity than a startup company without a revenue model or funding. Expect as much as 50 percent equity if you join someone else in a garage, less than 1 percent if you receive a competitive salary, and somewhere between 1 percent and 50 percent if you receive a below‐market salary. For more information, visit

For information on different types of equity a company can grant and the resulting tax consequences, go to Equity documents are always long and confusing, and slight wording changes can greatly favor the company instead of the employee. If the amount of equity is a large portion of your total compensation, seek qualified legal counsel to review your employment documents before you sign.