Sales Commission Plan Agreement

# Sales Commission Plan Agreement This Sales Commission Plan Agreement (the "Agreement" or "Plan") is entered into by and between ___________ (the "Company" or "Employer") and ___________, serving in the role of ___________ (the "Employee"), for the plan year ___________. This Plan is effective as of ___________ (the "Effective Date"). This Agreement sets out the Employee's variable compensation for the plan year and supersedes any prior commission plan between the parties for the same period. Except as expressly stated, nothing in this Plan changes the Employee's at-will employment status or any other term of employment. ## 1. Base Salary The Employee will receive an annual base salary of ___________, paid on a ___________ basis, less applicable withholdings and deductions, in accordance with the Company's standard payroll practices. Base salary is not affected by quota attainment and is paid regardless of sales performance. ## 2. On-Target Earnings The Employee's on-target earnings ("OTE") for the plan year are ___________. OTE represents the total expected annual compensation at 100% quota attainment and comprises the base salary in Section 1 plus the target variable (commission) pay described in this Plan. OTE is a planning figure only. It is not a guarantee of earnings, and actual commissions depend on actual quota attainment. ## 3. Commission Structure The Employee's annual quota is ___________, measured over a ___________ period (each, a "quota period"). At 100% quota attainment, the Employee earns commission at a target rate of ___________% (the "base rate"), calculated on the following commission basis: ___________. Commission is measured against the commission basis selected above. Where the basis is Bookings or Invoiced Revenue, an amount counts toward attainment when the corresponding contract is signed or invoice is issued. Where the basis is Cash Collected, an amount counts when the customer payment clears. Where the basis is ARR or MRR, an amount counts when the recurring revenue is contractually committed and recognized under the Company's revenue policy. **Clawback.** If a customer cancels, refunds, charges back, or fails to pay an invoice within ___________ of the date the related commission accrued, the Company may claw back the commission attributable to that transaction. A clawback may be applied by offsetting future commission payments or, where permitted by applicable law, by other lawful recovery. The Company will provide the Employee with a written explanation of any clawback applied. ## 4. Accelerators For attainment above 100% of quota, accelerated commission rates apply to the portion of bookings or revenue above the 100% threshold. The accelerator schedule for the plan year is as follows: ___________. Accelerators apply only to the incremental attainment within each tier, not retroactively to attainment in lower tiers. Accelerated rates are calculated and paid on the same schedule as base-rate commission. ## 5. Decelerators Below 50% of quota attainment for a quota period, no commission is earned for that period. Between 50% and 100% of quota attainment, commission is paid at the base rate on actual bookings or revenue achieved (the "pro-rata" calculation). Pro-rata commission is computed by multiplying actual attainment by the base rate; there is no minimum guarantee within this band beyond the 50% floor. The decelerator floor is evaluated per quota period and does not carry forward to later periods. ## 6. Quota Relief and Ramp The Employee's ramp period is ___________. During any ramp period, quota is pro-rated to reflect the portion of the quota period the Employee was ramped. Quota relief is also available for an approved leave of absence exceeding two (2) weeks, pro-rated for the duration of the leave. Quota adjustments, including territory changes, account reassignments, and relief grants, are made at the Company's sole discretion. The Company will provide reasonable written notice of any quota adjustment before it takes effect. ## 7. Payment Timing