Total Target Compensation Explained: Salary, Bonus & Equity Breakdown

What’s your total comp?

If you’ve ever interviewed for a tech, sales, or leadership role in recent years, chances are that question popped up on forums, from recruiters, or inside Slack communities. And yet, most candidates and even some hiring teams struggle to clearly define what it actually means.

Total Target Compensation (TTC) is one of the most important metrics shaping offer decisions in today’s job market. Especially in 2025, where transparency in compensation strategy has become a competitive advantage for employers and a negotiation lever for employees, knowing your TTC matters more than ever.

The challenge? TTC is often confused with base salary, inflated with unrealistic bonuses, or misrepresented without context around stock options or performance expectations.

This guide breaks it all down what total target compensation really means, how it differs from other metrics like OTE, what components are included, how to calculate it, and how companies can design TTC structures that are clear, fair, and aligned to outcomes so that you can make informed decisions.

What is Total Target Compensation (TTC)?

Total target compensation is the projected annual earnings for a role, including base salary, bonuses, equity, and incentives. It represents what an employee is expected to earn when performance targets are met. Unlike base salary, it includes both fixed and variable pay components. 

Companies use total target compensation to define pay expectations transparently. Job seekers use it to evaluate offers fairly. This term is common in sales, tech, and executive hiring. Understanding total target compensation helps employers set competitive packages and candidates compare roles effectively.

TTC typically includes three main components: base salary, target bonuses or commissions, and equity or stock options. While actual earnings may vary depending on employee performance, TTC outlines what an employee can reasonably expect to earn if they meet goals.

It’s especially important in roles where incentive pay and long-term equity make up a substantial portion of income. In hiring conversations, clearly defining TTC helps both parties avoid misunderstandings and ensures fair, outcome-aligned compensation discussions.

Factors Influencing Total Target Compensation (TTC)

Even for roles with the same title, total target compensation can vary dramatically. Why? Because TTC is shaped by a combination of internal priorities and external market factors and no two companies approach it the same way. 

Here's how key factors influence how TTC is structured:

1. Compensation Philosophy

Companies structure TTC based on whether they prioritize annual base salary, incentive compensation, or equity.

• Market-competitive companies offer strong base salaries with moderate incentives.
• Performance-driven companies rely more on bonuses and short-term revenue targets.
• Equity-led firms focus on long-term value through stock options or RSUs.

2. Role Seniority & Impact

Higher-level or critical roles receive more variable pay and equity.

• Executives or strategic hires often command large upside due to their influence on outcomes.
• Roles tied to revenue, product, or innovation typically have more aggressive compensation structures.

3. Budget Constraints

Companies with limited budgets balance lower salaries with high-upside components.

• Startups often offer modest cash compensation but increase equity or bonuses to remain competitive.
• Leaner firms use TTC creatively to attract top talent despite cash limitations.

4. Market Benchmarking

Most organizations use compensation data to stay aligned with compensation expectations and industry standards.

• Tools like Radford, Mercer, or Levels.fyi help set TTC bands by geography, role, and level.
• Local cost-of-living adjustments and industry trends further shape compensation expectations.

5. Incentive and Commission Structures

Sales and quota-based roles have TTCs built around commission plan design.

• Ramp periods, quota difficulty, accelerators, and regional factors directly impact total cash compensation.
• Two reps in the same title can have very different TTCs based on plan complexity.

6. Internal Parity

Companies align TTC with existing pay structures to maintain fairness.

• Pay bands, peer comparisons, and promotion histories help prevent discrepancies.
• Consistent compensation builds trust and reduces internal friction.

These six factors show why TTC isn’t a one-size-fits-all figure; it’s a reflection of both strategy and structure.

What’s Included in Total Target Compensation

While TTC is often tossed around during interviews or sales performance reviews, its components aren’t always clearly defined. To evaluate compensation fairly or design packages that attract the right talent, it’s essential to understand what goes into it. 

Below are the three primary components that make up total target compensation.

1. Base Salary

This is the fixed annual amount paid to an employee, regardless of individual or company performance. For most corporate roles, annual base salary represents the largest component of total target compensation and provides income stability. It is typically benchmarked based on industry, location, and experience.

In sectors like tech and consulting, base pay is often supplemented with generous bonus or equity plans. However, it still serves as the core figure around which other compensation elements are structured. According to WTW’s 2024 survey, average base salaries saw a 5% bump globally, with tech hubs leading increases.

2. Variable Pay (Bonuses & Incentives)

Variable pay refers to performance-based bonuses. These typically come in the form of quarterly or annual bonuses, sales commission, target bonus, management-by-objective (MBO) bonuses, or milestone-based payouts. Unlike base salary, this component fluctuates based on results.

For example, in revenue-facing roles, hitting 100% of quota may unlock the full target commission. Exceeding goals could boost earnings beyond TTC. In leadership or strategic roles, variable pay may be tied to KPIs such as profit margin, sales team retention, and other relevant performance metrics.

In 2024, Deloitte UK reported bonus reductions across consulting teams due to market slowdown. This shows how broader business performance can impact this TTC component.

3. Equity and Stock Options

Equity-based compensation includes restricted stock units (RSUs), stock options, and performance grants. These are particularly common in tech and startup environments. While they do not offer immediate cash, they can significantly boost total earnings over time.

A standard equity package might include a four-year vesting schedule with a one-year cliff. This encourages retention while aligning employee incentives with company performance. For executives, this can form the majority of TTC. For instance, S&P 500 CEOs in 2024 had median stock awards reaching $10.2M, making up over 60% of total compensation.

Equity’s contribution to TTC depends on fair market value (FMV) and company growth prospects. In early-stage startups, equity may outweigh variable cash pay in value, even though liquidity takes longer to realize.

How to Calculate Total Target Compensation

Total Target Compensation is calculated by adding three core components: base salary, target variable pay, and the annualized value of equity or stock options. Some companies may also include cash allowances or performance perks in the total.

Formula:

TTC = Base Salary + Target Bonuses or Commissions + Equity Value (annualized) + Optional Perks

Let’s break that down:

• Base Salary: The fixed annual pay an employee receives.
• Target Variable Pay: Includes annual or quarterly bonuses, sales commissions, or MBO payouts based on expected performance.
• Equity or Stock Options: These are typically valued based on fair market value (FMV) and annualized over a vesting schedule. For instance, a $40,000 stock grant over 4 years equates to $10,000 annually.
• Perks: Optional additions like signing bonuses, car allowances, or relocation support may also be factored in, especially at executive levels.

Example:

Consider a Senior Account Executive role with the following offer:

• Base Salary: $80,000
• Target Commission: $80,000
• Equity Value (annualized): $10,000

Total Target Compensation = $170,000

Startups often weigh more on long-term incentives like equity, while enterprises lean on base and bonuses. Regardless of company size, calculating TTC accurately ensures compensation expectations are realistic, transparent, and aligned with business goals.

Need help automating your TTC calculations at scale?

Everstage’s Sales Compensation Automation and Commission Processing tools make it easy to manage variable pay, equity allocations, and performance-based bonuses, without the spreadsheets. From syncing quota attainment to real-time earnings breakdowns, Everstage ensures every stakeholder sees exactly how their compensation is structured.

Total Target Compensation vs. On-Target Earnings (OTE)

Total Target Compensation (TTC) and On-Target Earnings (OTE) are often used interchangeably, but they serve different purposes and apply to different roles.

OTE refers specifically to the expected earnings for sales roles that include base salary and achievable commissions when performance goals (like sales quotas) are met.

TTC, on the other hand, is broader. It covers not just base and bonuses but also long-term incentives like equity and stock options. It’s more commonly used in corporate, executive, and tech roles where equity makes up a significant portion of the compensation package.

For example, a SaaS Account Executive may have an OTE of $150,000 (base + commission), while a VP of Product might have a TTC of $320,000 (base + bonus + equity).

Clarity between the two terms is critical. Misunderstanding can lead to confusion during hiring negotiations or internal reviews. Use OTE when discussing incentive-heavy sales roles, and TTC when evaluating or designing full compensation packages.

How to Design an Effective Total Target Compensation Plan

Designing a competitive and effective TTC plan is not just about numbers. It’s about aligning incentives with business goals, market realities, and employee expectations. A strong TTC structure helps attract top talent, retain key contributors, and drive performance. 

Here’s how to do it right:

1. Define the Role Clearly

Start with clarity. The more precisely you define the role, the easier it is to build a compensation model that fits.

• Outline the seniority level, core responsibilities, and expected outcomes.
• Identify whether the role is revenue-generating, support-oriented, or strategic. This directly impacts how you structure variable pay and equity.
• Consider geographic location, especially for remote or hybrid roles. Compensation expectations vary across cities, regions, and countries.

For instance, a Product Manager role based in San Francisco may require a higher equity component compared to the same role in Austin. A clear role definition ensures TTC is both fair and performance-aligned.

2. Benchmark Against Market Rates

Before setting TTC, it is essential to understand what the market is paying.

• Use benchmarking tools like Radford, Payscale, Mercer, or Levels.fyi to gather compensation data by role, industry, and region.
• Compare similar roles internally to ensure internal parity.
• Adjust for company type. Startups typically offer lower cash and higher equity, while established firms reverse that ratio.

Accurate benchmarking helps avoid both overpayment and under-offering, which can hurt hiring and retention.

3. Set a Balanced TTC Structure

A well-designed TTC plan blends fixed and variable components in a way that matches the role’s purpose and performance drivers.

• Define the base-to-variable ratio based on the nature of the role. Sales roles may follow a 50/50 model, while engineering or legal roles lean closer to 90/10 or fully fixed.
• Decide whether equity or bonuses should be part of the pay mix, and determine appropriate levels.
• Include perks only if they offer real value. Stock options, learning stipends, or wellness budgets can strengthen the overall compensation offering.

A balanced structure motivates employees while ensuring financial predictability for the business.

4. Align Compensation with Business Objectives

TTC should support your company’s strategic goals.

• Tie variable pay to measurable outcomes such as revenue growth, customer retention, or project delivery.
• Use equity and long-term incentives to encourage retention and foster a sense of ownership.
• Avoid rewarding behaviors that do not drive meaningful impact. Ensure every element of compensation reinforces the outcomes that matter.

For example, Bayer’s 2024 compensation report showed that only about 50% of target payouts were achieved due to performance shortfalls. This demonstrates how variable components reflect actual business success.

5. Communicate the Breakdown Transparently

Even the best TTC plan can fall short if employees don’t understand how it works.

• Break down each component: base, variable, and equity. Clearly explain what is guaranteed, what is performance-based, and how each part is earned.
• Share vesting schedules, payout timelines, and conditions for receiving bonuses or equity.
• Use realistic examples or ranges to illustrate both the expected and potential upside.

Transparent communication increases trust, improves offer acceptance rates, and reduces negotiation friction. According to Forbes, comprehensive total rewards strategies improve employee loyalty by 1.3 times and boost productivity by 1.2 times.

Want to make your TTC structure crystal clear for employees?

With Everstage’s Payee Experience and Reporting & Analytics modules, every employee gets real-time visibility into their earnings, commissions, and equity vesting, backed by detailed dashboards and automated notifications. That means fewer questions, faster alignment, and greater trust in your compensation plans.

Conclusion

Total target compensation gives a complete picture of what a role is truly worth, combining base salary, bonuses, and equity to reflect performance expectations. For employers, it’s a way to align pay with impact. For candidates, it helps evaluate offers beyond just base pay.

As compensation structures evolve, clarity around TTC will only grow more critical. It ensures fair conversations, transparent expectations, and smarter decisions on both sides of the table.

If you’re looking to design compensation plans that drive performance and trust, Everstage can help. Let’s build TTC frameworks that work for your business and your people.