If you were going to do it from a pure accounting perspective, you'd take the expected value of the options + salary and compare directly. You should probably also figure in high value benefits like 401(k) match.
The problem there is, the expected value is more or less the current market value of the options (if you believe in anything approaching an efficient market), which is more or less the strike price times the number of shares. So, often these are in the neighborhood of $10k over 4 years or $2500/yr.
In other words, don't try to talk yourself into it from an accounting perspective.
Expected value is not $millions. Expected value is a few hundred $k (usually, if you are realistic about the potential of the business and your tiny share as an employee) MULTIPLIED by the relatively small chance of hitting that exit, say 1%. In short, a few thousand dollars, which is approximately what you get by multiplying out the strike price.
IMHO it takes risk into account in a very sobering way.
See the other posts. Someone had a good one "Treat options like confetti".
I own a few options in companies I was at. One went under and the other did a "tech deal" and then divested it's assets. Both cases my options are worth about $0 :)
I have to think that putting it into a formula is difficult. It all depends on risk, obviously: how certain is a person that the company will be worth something? On top of that, you have ability to get by at a given salary. If you have enough saved to live for 5 years with $1/yr salary, then you can afford more of a risk than if you can live for 6 months without a salary. Or if you can afford to live at half your salary, but without saving for retirement, where does that leave you?
It entirely depends on the person and how risk-averse (or not) they are.
.
Current Salary On Open Market = X
Startup Salary = Y
Option Value Today = Z
.
4(X) = 4(Y)+Z(2)
this is obviously the big IF, if people are saying think of it as windfall, maybe 1.5??