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Sales Compensation Plan

PREPARED FOR
[Sales Representative Name] 

PREPARED BY
[Company Name] 

 Sales Compensation Plan

This document outlines the agreement between [Company Name] (“Company”) and [Sales Representative Name] (“Sales Representative”) regarding terms related to sales incentive compensation. The Company and Sales Representative enter into this agreement, whereby the Sales Representative provides sales services to the Company in return for the compensation specified herein.

SALES REPRESENTATIVE DETAILS.

Sales Representative Details
Sales Representative Name:	[Sales Representative Name]
Title/Designation:	[Sales Representative Designation]
Joining Date:	[Hire Date]
Reporting Manager:	[Reporting Manager Name]
Reporting Manager Designation:	[Reporting Manager Designation]
Commission Fiscal Year:	FY [Commission Fiscal Year]
Commission Plan Term:	[Commission Plan Term]
Commission Plan Validity:	[Commission Plan Start Date] TO [Commission Plan End Date]

SALARY DETAILS.

Salary Component	Salary Amount
Base Salary	$[Base Salary]
Sales Incentive	$[Sales Incentive]
Compensation Mix	[Base: Incentive Ratio]
On Target Earnings	$[On Target Earnings]

SALES INCENTIVE DETAILS.

The Sales Incentive Plan is structured into performance tiers based on the Monthly Annual Recurring Revenue (ARR) generated by the Sales Representative. Each tier corresponds to a specific incentive percentage applied to the Annual Contract Value (ACV).
 
1. TIER 1.

(a) For ARR up to [Tier 1 Amount] per month
(b) Incentive: [Tier 1 Percentage] of Annual Contract Value (ACV)
 
2. TIER 2.

(a) For ARR between [Tier 2 Minimum Amount] and [Tier 2 Maximum Amount] per month
(b) Incentive: [Tier 2 Percentage] of ACV
 
3. TIER 3.

(a) For ARR above [Tier 3 Amount] per month
(b) Incentive: [Tier 3 Percentage] of ACV

Note: ARR and ACV will be calculated based on signed customer contracts as recognized by the Company’s finance and revenue operations teams.

EXPENSES.

The Account Executive will be paid for all travel and lodging expenses related to sales activities within [Reimbursement Period in Days] day(s) of being presented with the receipts and a completed and accepted expense reimbursement form.

DRAW.

The Sales Representative receives a [Frequency of Unrecoverable Draw] unrecoverable draw against the sales incentive plan as follows, based on the participation in and completion of the [Onboarding Program Duration] day(s).

Month	Non-Recoverable Draw (%)	Value ($)
Month 1	[Month 1 Non-Recoverable Draw]%	$[Month 1 Non-Recoverable Draw]
Month 2	[Month 2 Non-Recoverable Draw]%	$[Month 2 Non-Recoverable Draw]
Month 3	[Month 3 Non-Recoverable Draw]%	$[Month 3 Non-Recoverable Draw]

TERMS AND CONDITIONS.

1. PAYMENT ADJUSTMENTS.

In the event of revenue reversals, customer cancellations, or accounting adjustments, the Company reserves the right to:

(a) Adjust, withhold, or recover previously paid commissions that were based on such transactions.

(b) Reflect the adjustment in future commission payments or require repayment from the Sales Representative.

(c) Any disputes regarding payment adjustments shall be reviewed and resolved at the discretion of the authorized Company representative.
 
2. CLAWBACK.

To receive your full commission with no clawback, the customer must remain active for [Minimum Customer Retention Period in Months] month(s) from the date we begin billing. If a customer cancels within this period, you will have a prorated amount clawed back from your commission on the sales made.
 
3. DRAW CLAWBACK.

If the Sales Representative voluntarily leaves the position within the first [Clawback Period in Months] month(s) of this plan, the Draw payment(s) will be due back to the Company through a payroll deduction from any monies owed to the Sales Representative.

4. SPLITS.

If more than one Sales Representative meaningfully contributes to a deal, the commission may be shared among them. All commission splits must be approved by [Authorized Company Leader], and the allocation will be determined based on each representative’s involvement in the deal.

5. TERMINATION OF EMPLOYMENT.

Upon voluntary or involuntary termination of the Sales Representative’s engagement with the Company, commissions will be paid only on transactions dated prior to the termination date. Any amounts owed to the Sales Representative will be calculated in accordance with applicable laws after withholding taxes and other dues.

OTHER IMPORTANT TERMS.

The Sales Rep agrees to follow all Federal and Local laws while engaged in providing services to the Company during the period of this agreement.

The Sales Rep shall not engage in any other employment during the term of this agreement. The Company reserves the right, at its sole discretion, to require the Sales Representative to discontinue any such outside employment.

The Sales Rep shall use the most ethical practices while engaging in any sales activity.

The Sales Rep agrees to protect all confidential material, including prospect data, sales data, and client information belonging to the Company and shall take all reasonable care to ensure that such confidential material is not disbursed to anyone outside the Company.

This entire agreement shall be governed by the laws of the State of [Governing Law].

The Company’s Authorized Representative reserves the right to override the terms of this agreement without cause.

ACCEPTANCE AND SIGNATURE.

If you agree with the terms and conditions mentioned above, please confirm your acceptance of this Sales Compensation Plan by signing below: 

[Sales Representative Name] 

[Company Name] 

Name:

Name:

Signature:

Signature:

Date:

Date:

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