The firm’s client, Serita Bawden, is a software engineer considering job offers from two different companies: SolidTech, an established public company, and NewVenture, a smaller private firm. Serita provided details on both offers (see below). Available financial information on the two companies is also attached.

Package from SolidTech:

Base Salary –                      $120,000

Expected Bonus –               $12,000-$18,000 (10-15% of salary, exact bonus within this range is determined using bonus model where individual performance is evaluated using manager and peer reviews, prior history suggests that maximum bonuses are awarded to high achieving individuals in years when FIRM benchmarks are also met)

Equity Compensation –       400 RSUs with a 4-year graded vesting schedule and a 10-year term

Medical & Dental –              PPO program, primary care provider co-pay $15, specialist provider co-pay $30 (annual employee cost for single individual is $1,000)

401(k) Plan –                       administered by Fidelity, company matches dollar for dollar

Package from NewVenture:

Base Salary –                      $120,000

Expected Bonus –               $22,00-$44,000 (~20-40% of salary, no information provided by recruiter on determination of bonus or past history of bonus payouts)

Equity Compensation –       10,000 non-qualified stock options with a 4-year graded vesting schedule and a 10-year term, exercise price expected to be $1.00

Medical & Dental –               PPO program, primary care provider co-pay $15, specialist provider co-pay $30 (annual employee cost for single individual is $5,000)

401(k) Plan –                       administered by Transamerica, company does not match

Serita has hired your team to provide her with tax-related compensation advice. In particular, she would like an estimate of her after-tax income next year given each offer (assume she starts 1/1/2019). Also, she would like to know if the two offers have different future tax implications and whether there are significant non-tax factors she should consider in her decision making.

Prepare a brief memo (maximum 3 pages, single-spaced, excluding exhibits) for Serita outlining your analysis and recommendation. Your memo should include exhibits (spreadsheets or calculations) to support your analysis. Make sure your submitted document clearly indicates your group number and is well formatted (could be easily printed). Your document should be entirely self-explanatory. In other words, if Serita were looking at the document with you should she should be able to follow along and understand your calculations.