# Sales Comp Plan Pack

**Company:** Seed-stage B2B SaaS (API monitoring tool)
**Prepared:** 2026-03-17
**Plan period:** 2026 plan year (effective upon first AE start date)
**Version:** 1.0 — Draft for founder/finance review

---

## 1) Context Snapshot

### Company & GTM

| Dimension | Detail |
|---|---|
| Stage | Seed |
| Product | API monitoring tool (B2B SaaS) |
| ICP | Engineering/DevOps teams at mid-market software companies |
| Pricing model | SaaS subscription (annual contracts) |
| Typical ACV | $15,000 |
| Average sales cycle | 40 days |
| Current ARR | $50,000 (founder-led) |
| ARR target (this year) | $600,000 |
| Net new ARR needed | $550,000 |
| GTM motion | Founder-led playbooks transitioning to AE-led; likely a mix of inbound (content/PLG hand-raisers) and outbound |
| Roles in scope | 2 Account Executives (first sales hires) |
| Known problem | Early churn in the first 90 days from rushed/bad-fit deals |

### Assumptions & Unknowns

The following assumptions are made where data was not provided. Each should be validated within the first 90 days of plan operation.

| Assumption | Value used | Validation plan |
|---|---|---|
| Win rate (opp-to-close) | 20-25% | Track in CRM from day 1; recalibrate quota at 90-day mark |
| Average discount | 5-10% off list | Monitor in CRM; set approval thresholds |
| Gross margin | ~80% (typical SaaS) | Confirm with finance |
| 90-day logo churn rate | ~15% (problematic; target <8%) | Measure cohort churn monthly |
| Pipeline source split | 60% founder/marketing-sourced, 40% AE-sourced (ramp period); shifting to 50/50 by Q3 | Track source attribution |
| Ramp time to full productivity | 3 months | Track first-deal close timelines |
| CAC payback target | <18 months | Compute after first quarter of AE-sourced deals |
| Sales comp budget | ~20-25% of net new ARR (fully ramped, at-plan) | Model quarterly |

### Time Horizon

This plan optimizes for **new ARR bookings** with a **90-day retention quality gate**. The primary horizon is annual, with quarterly quota periods and monthly commission payouts.

---

## 2) Comp Philosophy

### What We Want (desired behaviors)

1. **Close well-qualified deals** that stay beyond 90 days and expand over time.
2. **Run a disciplined sales process** aligned with the founder playbook: proper discovery, technical validation, stakeholder alignment.
3. **Protect pricing integrity** — sell on value, not discounts.
4. **Build pipeline proactively** — AEs at seed stage must self-source as well as work inbound.
5. **Hit quota consistently** — the plan should make on-target attainment realistic and rewarding.

### What We Want to Prevent (anti-goals)

1. **Closing bad-fit customers** that churn within 90 days (the known problem).
2. **Deep discounting** to pull deals forward or inflate bookings.
3. **Pipeline stuffing** with unqualified opportunities to look busy.
4. **Sandbagging** — holding deals to hit accelerators in a future period.
5. **Comp plan complexity** that distracts from selling. Reps should be able to estimate their payout in their head after every deal.

---

## 3) Role-to-Metric Mapping

### Account Executive (AE) — Full-Cycle New Business

| Dimension | Detail |
|---|---|
| **Primary metric** | Net New ARR Bookings (closed-won, signed annual contracts) |
| **Crediting event** | Deal is "closed-won" when: (a) contract is fully executed, and (b) subscription start date is within the quota period. |
| **Who gets credit** | Single AE ownership. If a founder assists on a deal, the AE gets 100% credit (founder is enablement, not an overlay). |
| **Split credit** | Not applicable at this stage (2 AEs, no overlays, no SDRs). If added later, define splits before the AE starts prospecting. |
| **Eligible revenue** | First-year ARR on new logos only. Expansion and renewal revenue are excluded from this plan (handled by founders/CS in year one). |
| **Exclusions** | Professional services revenue, one-time fees, and internal/test accounts are not creditable. |
| **Discount impact** | Discounts >10% require founder approval. Commissions are paid on the actual (discounted) contract value, not list price. |

### Why This Metric Works

- **Measurable:** Closed-won ARR is trackable in any CRM.
- **Attributable:** Single AE owns the full cycle from opportunity to close.
- **Controllable:** AEs control discovery, demo, proposal, and close. The 90-day retention holdback (Section 7) creates accountability for deal quality without adding a second metric.

---

## 4) OTE + Pay Mix

### OTE Table

| Component | Amount | Notes |
|---|---|---|
| **Base salary** | $75,000 | ~50% of OTE; provides stability during the early, uncertain phase |
| **Variable (at-target)** | $75,000 | ~50% of OTE; earned through commission on quota attainment |
| **On-Target Earnings (OTE)** | **$150,000** | Competitive for seed-stage AEs in a mid-market B2B SaaS motion |
| **Payment frequency** | Base: semi-monthly; Variable: monthly (following month) | Keeps cash flow predictable for reps |

### Pay Mix Rationale

- **50/50 split** is the standard starting point for full-cycle AEs with moderate cycle lengths (40 days). It is aggressive enough to motivate without starving reps during ramp.
- At seed stage with an unproven motion, a higher-base mix (e.g., 60/40) is defensible if candidate negotiations require it. Do not go below 45% base — the product and pipeline are unproven.
- The $150k OTE is competitive for a first AE hire at a seed-stage company selling $15k ACV deals. It is below enterprise AE OTEs ($180-250k) and above SMB/transactional OTEs ($100-120k), which matches the mid-market motion.

### Economic Viability Check

| Scenario | AE bookings | Comp cost (base + variable) | Comp as % of AE bookings |
|---|---|---|---|
| Low (60% attainment) | $165,000 | $75,000 + $45,000 = $120,000 | 73% |
| Base (100% attainment) | $275,000 | $75,000 + $75,000 = $150,000 | 55% |
| High (130% attainment) | $357,500 | $75,000 + $112,500 = $187,500 | 52% |

At base attainment, comp cost is ~55% of AE-sourced bookings. This is high for a mature company but acceptable at seed stage where AEs are building the motion. As pipeline matures and quota capacity increases, this ratio will improve. The target should be <30% comp-to-bookings within 18 months.

---

## 5) Quota + Ramp Model

### Quota Derivation

**Top-down approach:**
- Net new ARR target: $550,000
- 2 AEs, each responsible for: $275,000 annual quota
- Quarterly quota (fully ramped): $68,750 per AE

**Bottom-up cross-check:**
- $275,000 annual quota / $15,000 ACV = ~18.3 deals per AE per year = ~4.6 deals per quarter
- At 20-25% win rate, that requires 18-23 qualified opportunities per quarter (5-6 per month)
- At 40-day cycle, an AE can work ~8-10 active opportunities at a time
- Pipeline coverage needed: 4-5x quota ($275k-$344k in pipeline per quarter)

**Verdict:** The quota is achievable but requires strong pipeline support from founders/marketing, especially during ramp. If pipeline generation is slower than assumed, revisit quota at the 90-day mark.

### Ramp Schedule (3-Month Ramp)

New AEs receive a **3-month ramp** with reduced quota and a non-recoverable draw (guarantee).

| Month | Quota % of full | Effective monthly quota | Draw / guarantee | Expected activities |
|---|---|---|---|---|
| Month 1 | 25% | $5,729 (~0.4 deals) | $6,250 guaranteed (variable floor) | Onboarding, shadow calls, learn playbook, build pipeline |
| Month 2 | 50% | $11,458 (~0.8 deals) | $6,250 guaranteed (variable floor) | Run first solo deals, build pipeline, first close expected |
| Month 3 | 75% | $17,188 (~1.1 deals) | $6,250 guaranteed (variable floor) | Active pipeline, closing independently, 1-2 deals expected |
| Month 4+ | 100% | $22,917 (~1.5 deals) | No draw; standard commission | Full quota, fully ramped |

**Notes on the draw:**
- The draw is a **non-recoverable guarantee**: if variable earnings are below $6,250/month during ramp, the AE receives $6,250. If variable earnings exceed $6,250, the AE receives the higher amount (no "keeping both").
- This ensures AEs take home at least $81,250/month during ramp ($75k base / 12 = $6,250 base + $6,250 guarantee = $12,500/month).
- Total maximum draw exposure per AE: $18,750 over 3 months (if zero deals close). Budget for $37,500 total across both AEs in worst case.

### Quota Table — Full Year (Per AE)

| Period | Quota ($) | Quota (deals, approx.) | Ramp-adjusted? |
|---|---|---|---|
| Q1 (ramp quarter) | $34,375 (50% of full) | ~2.3 deals | Yes |
| Q2 | $68,750 | ~4.6 deals | No |
| Q3 | $68,750 | ~4.6 deals | No |
| Q4 | $68,750 | ~4.6 deals | No |
| **Full year** | **$240,625** | **~16 deals** | Ramp-adjusted annual total |

**Note:** The ramp-adjusted annual total ($240,625 per AE, $481,250 for 2 AEs) is below the $550k target. The gap (~$69k) must come from founder-led deals and/or over-performance. This is realistic: (a) the founders will continue closing some deals, especially during AE ramp, and (b) strong AEs will exceed ramp quotas. If both AEs hit 115% of their ramp-adjusted annual quota, they produce ~$553k combined.

### Scenario Analysis

| Scenario | Attainment | AE 1 bookings | AE 2 bookings | Total AE bookings | Founder contribution | Total new ARR |
|---|---|---|---|---|---|---|
| Low | 70% | $168,438 | $168,438 | $336,875 | $100,000 | $436,875 |
| Base | 100% | $240,625 | $240,625 | $481,250 | $70,000 | $551,250 |
| High | 125% | $300,781 | $300,781 | $601,563 | $50,000 | $651,563 |

---

## 6) Commission Mechanics

### 6a) Base Commission Rate

| Component | Value | Derivation |
|---|---|---|
| Annual variable at target | $75,000 | 50% of $150k OTE |
| Annual quota (fully ramped) | $275,000 | Top-down allocation |
| **Base commission rate** | **27.27%** of eligible ARR | $75,000 / $275,000 |

For simplicity, round to **27% base commission rate** on all eligible net new ARR bookings.

### 6b) Attainment Bands & Accelerators

Commissions are calculated on a **quarterly** basis against quarterly quota. Rates apply to the incremental ARR within each band.

| Quarterly attainment | Commission rate | Multiplier vs. base | Applies to |
|---|---|---|---|
| 0% - 100% | 27% | 1.0x | All eligible ARR up to quota |
| 101% - 125% | 40.5% | 1.5x | Incremental ARR above 100% quota |
| 126% - 150% | 54% | 2.0x | Incremental ARR above 125% quota |
| >150% | 54% | 2.0x (capped at this tier) | Incremental ARR above 150% quota |

**Why these accelerators:**
- The 1.5x accelerator at 101-125% is the standard "reward over-performance" tier. At $15k ACV, each incremental deal above quota earns the rep ~$6,075 in commission (vs. $4,050 at base rate).
- The 2.0x accelerator above 125% is aggressive but appropriate at seed stage: you want AEs to blow out quota, and each additional deal is extremely valuable for company trajectory.
- We soft-cap at 2.0x (no further acceleration above 150%) to prevent runaway costs from a single outsized deal, but we do NOT hard-cap total earnings. Top performers should be paid well.

### 6c) Worked Payout Examples

**Example A: Standard quarter, 100% attainment**

| Item | Value |
|---|---|
| Quarterly quota | $68,750 |
| Closed-won ARR | $68,750 (100% attainment) |
| Commission (27% x $68,750) | $18,563 |
| 80% paid at booking (see Section 7) | $14,850 |
| 20% held for 90-day retention | $3,713 |
| Monthly base salary | $6,250 |
| **Total Q comp (before holdback release)** | $75,000 base + $14,850 commission = $89,850 |

**Example B: Strong quarter, 120% attainment**

| Item | Value |
|---|---|
| Quarterly quota | $68,750 |
| Closed-won ARR | $82,500 (120% attainment) |
| Commission on first $68,750 (27%) | $18,563 |
| Incremental ARR above quota | $13,750 |
| Accelerated commission (40.5% x $13,750) | $5,569 |
| Total commission | $24,131 |
| 80% paid at booking | $19,305 |
| 20% held for 90-day retention | $4,826 |
| **Total Q comp (before holdback release)** | $75,000 base + $19,305 commission = $94,305 |

**Example C: Ramp quarter (Month 1-3), 80% of ramp quota**

| Item | Value |
|---|---|
| Ramp quarterly quota (50% of full) | $34,375 |
| Closed-won ARR | $27,500 (80% of ramp quota) |
| Commission (27% x $27,500) | $7,425 |
| 80% paid at booking | $5,940 |
| 20% held for 90-day retention | $1,485 |
| Draw guarantee (3 months x $6,250) | $18,750 |
| Actual variable earned | $5,940 |
| Draw top-up ($18,750 - $5,940) | $12,810 |
| **Total Q comp** | $75,000 base + $18,750 draw = $93,750 (guaranteed minimum) |

**Example D: Deal churns within 90 days (holdback forfeited)**

| Item | Value |
|---|---|
| Deal closed | $15,000 ARR |
| Commission earned (27%) | $4,050 |
| 80% paid at booking | $3,240 |
| 20% held ($810) | Forfeited — customer cancelled at day 62 |
| **Net commission on this deal** | **$3,240** (vs. $4,050 if retained) |

**Example E: Discounted deal (15% discount, requires founder approval)**

| Item | Value |
|---|---|
| List price | $15,000 ARR |
| Discount | 15% (founder-approved) |
| Eligible ARR | $12,750 |
| Commission (27% x $12,750) | $3,443 |
| **Net impact vs. full-price deal** | Rep earns $607 less; natural disincentive to discount |

### 6d) Discount Policy

| Discount level | Approval required | Commission impact |
|---|---|---|
| 0-10% | AE discretion | Paid on actual (discounted) ARR |
| 11-20% | Founder/CEO approval | Paid on actual ARR |
| >20% | Founder/CEO + explicit business case | Paid on actual ARR; flagged for review |

Commissions are always calculated on the **actual contract value** (after discount), never list price. This creates a natural disincentive: a 15% discount on a $15k deal costs the rep ~$607 in commission.

### 6e) Payout Timing

| Event | Timing |
|---|---|
| Commission calculation | Monthly, based on closed-won deals in the prior calendar month |
| 80% commission payout | Paid in the payroll cycle following the close month (e.g., deal closes in March, 80% paid in April payroll) |
| 20% holdback release | Paid 90 days after subscription start date, if customer is still active (see Section 7) |
| Quarterly attainment true-up | Accelerators are calculated quarterly; any incremental accelerator amount is paid in the first payroll of the following quarter |
| Draw reconciliation | Monthly during ramp; draw top-up (if needed) included in same payroll as commission |

### 6f) Edge-Case Rules

**Multi-year deals:**
- Commission is paid on first-year ARR only. Years 2+ are treated as renewals and excluded from new-business AE comp (at this stage, renewals are founder/CS-managed).
- If a multi-year deal includes a discount for commitment (e.g., 10% off for 2-year term), commission is paid on the discounted first-year value.
- Rationale: keeps the AE incentivized to close annual contracts; multi-year discounts are already penalized through the discounted-ARR commission basis.

**Expansion revenue:**
- Expansion ARR (upsells, seat additions) on existing accounts is NOT creditable to AEs under this plan. Expansion will be managed by founders/CS during year one.
- Exception: if an AE sources and closes an expansion deal on an account they originally closed, and the expansion occurs within the same quarter as the original deal close, it may be credited at founder discretion. Document any such exception in the exceptions log.

**Mid-period territory or plan changes:**
- If quota or territory is changed mid-quarter, attainment is prorated based on days in each plan.
- If the company changes the plan mid-year, existing pipeline in advanced stages (proposal+ sent) is grandfathered under the prior plan terms for 30 days.

**AE departure:**
- Deals closed before departure date are fully credited and paid per normal schedule (including holdback releases).
- Deals in pipeline but not closed-won at departure are not creditable to the departing AE.
- The holdback is still subject to the 90-day retention gate, even if the AE has departed. Holdback is released per normal schedule if the customer is retained.

**Leaves of absence:**
- Quota is prorated for any approved leave exceeding 10 consecutive business days.
- Deals that close during leave (from prior pipeline) are fully credited.

---

## 7) Retention-Alignment Addendum

### Problem Statement

The company has observed early churn in the first 90 days from rushed deals. This indicates AEs (currently founders) may be closing customers who are not a strong fit, who have unmet expectations, or who were over-promised during the sales process. As the company transitions to AE-led sales, the comp plan must create a financial incentive for deal quality.

### Chosen Method: 80/20 Commission Holdback

| Dimension | Detail |
|---|---|
| **Method** | Partial holdback: 80% of commission paid at booking; 20% held pending 90-day retention |
| **Retention window** | 90 calendar days from subscription start date |
| **Trigger for holdback release** | Customer is "active" at day 90: subscription is live, no cancellation request filed, no churn flag in CRM |
| **Trigger for holdback forfeiture** | Customer cancels, downgrades to $0, or is flagged as churned within the 90-day window |
| **Data source** | CRM (subscription status) + billing system (payment status) |
| **Partial churn** | If a customer downgrades (but does not cancel) within 90 days, the holdback is forfeited on the lost ARR portion only. Example: $15k deal downgrades to $10k at day 45 — holdback is forfeited on the $5k difference ($5k x 27% x 20% = $270 forfeited). |
| **Disputes** | Rep may dispute a churn-triggered forfeiture within 15 business days. Disputes go to the founder/CEO for resolution. Valid dispute grounds: product outage caused churn, onboarding failure not attributable to rep, customer acquired by another company. |

### Why Holdback (Not Clawback)

- **Holdback** withholds a portion of commission until retention is confirmed. The rep never receives the money and then has to return it.
- **Clawback** pays the full commission upfront and then recovers it if churn occurs. This creates negative paychecks and erodes trust.
- At seed stage with first AE hires, holdback is strongly preferred: it is simpler to administer, avoids negative paycheck scenarios, and feels fairer to reps (they knew from day one that 20% was conditional).

### Fairness Check

| Question | Assessment |
|---|---|
| Does the AE influence 90-day retention? | **Yes, significantly.** AEs control discovery (qualifying fit), expectation-setting, and handoff quality. Most 90-day churn at this stage is driven by bad-fit deals or misaligned expectations — both within AE influence. |
| Are there non-AE churn drivers? | **Yes.** Product bugs, onboarding gaps, and support failures can cause churn outside AE control. The dispute process (above) addresses these cases. |
| Is 20% proportional? | **Yes.** 20% holdback is a meaningful incentive (~$810 on a $15k deal) without being punitive. The rep still earns 80% at booking. |

### Rep Messaging (How We Explain It)

> "We pay 80% of your commission when the deal closes and the remaining 20% after the customer has been active for 90 days. This rewards closing customers who are a genuine fit and stay. If a customer cancels within 90 days, you keep the 80% you already received but forfeit the 20% holdback on that deal. If churn happens for reasons outside your control (product issue, onboarding failure), you can dispute and we will review it."

---

## 8) Admin & Governance

### 8a) Required CRM Fields

Every closed-won deal must have these fields populated before commission is calculated.

| CRM Field | Owner | Purpose |
|---|---|---|
| Deal Owner (AE) | AE | Commission attribution |
| Closed-Won Date | AE | Determines quota period and payout timing |
| Subscription Start Date | AE / Ops | Starts the 90-day retention clock |
| Annual Contract Value (ACV/ARR) | AE | Commission calculation basis |
| Discount % | AE | Tracks discount level; triggers approval workflow if >10% |
| Discount Approval (Y/N + approver) | Founder | Audit trail for discounts >10% |
| Deal Source (inbound/outbound/partner) | AE | Pipeline analytics (not used in comp calc) |
| Contract Term (months) | AE | Multi-year deal identification |
| Customer Status (at day 90) | Ops / CS | Retention holdback release/forfeit trigger |
| Churn Date (if applicable) | Ops / CS | Holdback forfeiture trigger |
| Churn Reason | Ops / CS | Dispute resolution; product feedback |

### 8b) Payout Process

| Step | Owner | Timing |
|---|---|---|
| 1. AE marks deal as closed-won in CRM | AE | Within 1 business day of contract execution |
| 2. Founder/CEO reviews closed-won deals for accuracy | Founder | Weekly |
| 3. Monthly commission statement generated | Ops / Finance | By the 5th business day of the following month |
| 4. Rep reviews and acknowledges statement | AE | Within 5 business days of receiving statement |
| 5. 80% commission paid | Finance | In the next payroll cycle after acknowledgment |
| 6. 90-day retention check | Ops | On the 90th day after subscription start |
| 7. 20% holdback released (if retained) or forfeited | Finance | In the payroll cycle following the 90-day check |

### 8c) Disputes & Exceptions

| Dimension | Rule |
|---|---|
| **Dispute window** | 15 business days from commission statement date |
| **How to dispute** | Email to [founder/CEO email] with deal name, amount in question, and reason |
| **Resolution owner** | Founder/CEO (single decision-maker) |
| **Resolution timeline** | 10 business days from dispute filing |
| **Exceptions authority** | Only the founder/CEO can approve exceptions to this plan |
| **Documentation** | All exceptions logged in the Exceptions Log (see template below) with date, deal, reason, approver, and decision |

### 8d) Change Control

| Dimension | Rule |
|---|---|
| **Plan changes** | The company may update the comp plan with **30 days written notice** to affected reps |
| **Grandfathering** | Deals in advanced pipeline stages (proposal sent or later) at the time of notice are paid under the prior plan terms |
| **Frequency** | Plan will be reviewed quarterly for the first year. Major structural changes no more than once per half |
| **Mid-year adjustments** | Quota adjustments (up or down) may be made quarterly with 15 days notice and written rationale |

### 8e) Exceptions Log Template

| Date | Deal/Account | Exception requested | Reason | Approved by | Decision | Notes |
|---|---|---|---|---|---|---|
| _Example:_ | _Acme Corp_ | _Credit deal closed 2 days after quarter end_ | _Contract was substantially complete; legal delayed signature_ | _CEO_ | _Approved, credited to prior quarter_ | _One-time; set 48-hour grace window going forward_ |

---

## 9) Rep-Facing One-Pager + FAQ

### Sales Comp Plan — One-Pager

**Plan name:** AE New Business Compensation Plan
**Effective date:** [AE start date]
**Eligible roles:** Account Executive (new business)
**Plan period:** 2026 plan year (quarterly quota periods)

**What you get paid on:**
Net new ARR from closed-won annual contracts with new customers.

**Your numbers:**

| Component | Amount |
|---|---|
| Base salary | $75,000/year ($6,250/month) |
| Variable (at target) | $75,000/year |
| OTE | $150,000/year |
| Annual quota (fully ramped) | $275,000 ARR |
| Quarterly quota (fully ramped) | $68,750 ARR |
| Base commission rate | 27% of eligible ARR |

**Accelerators (quarterly):**

| Your attainment | Commission rate |
|---|---|
| Up to 100% | 27% (base) |
| 101-125% | 40.5% (1.5x) on incremental ARR |
| 126%+ | 54% (2.0x) on incremental ARR |

**Ramp (first 3 months):**

| Month | Quota (% of full) | Guaranteed variable floor |
|---|---|---|
| 1 | 25% | $6,250/month |
| 2 | 50% | $6,250/month |
| 3 | 75% | $6,250/month |
| 4+ | 100% | Standard commission |

**Retention rule:**
80% of commission is paid at deal close. 20% is held for 90 days. If the customer is still active at day 90, you receive the remaining 20%. If the customer cancels within 90 days, the 20% holdback is forfeited on that deal. You can dispute forfeitures caused by factors outside your control.

**Payout timing:**
- Commissions are calculated monthly.
- 80% is paid in the payroll cycle following the close month.
- 20% holdback is released 90 days after subscription start (if customer is active).
- Accelerators are trued up quarterly.

**Discount rules:**
- You can discount up to 10% at your discretion.
- 11%+ requires founder/CEO approval.
- Commission is always paid on the actual contract value (after discount).

**Quick math — what a deal is worth to you:**

| Deal size | Commission (27%) | 80% at close | 20% at day 90 |
|---|---|---|---|
| $15,000 (full price) | $4,050 | $3,240 | $810 |
| $12,750 (15% discount) | $3,443 | $2,754 | $689 |
| $15,000 (above quota, 1.5x) | $6,075 | $4,860 | $1,215 |

**Disputes:** Email [founder/CEO] within 15 business days of your commission statement. Resolution within 10 business days.

---

### Frequently Asked Questions (FAQ)

**Q1: How is my quota calculated?**
Your annual quota is $275,000 in net new ARR (approximately 18 deals at $15k ACV). This is split into quarterly quotas of $68,750. During your 3-month ramp, your quarterly quota is reduced to 50% of the full amount ($34,375). Starting in your second quarter, you are on full quota.

**Q2: When do I get paid?**
Commissions are calculated monthly and paid in the following month's payroll cycle. You will receive a monthly commission statement by the 5th business day. You have 5 days to review it. The 80% commission is paid in the next payroll after your acknowledgment. The 20% holdback is paid ~90 days later (assuming customer retention).

**Q3: What happens if a customer cancels early (within 90 days)?**
You keep the 80% commission you already received. The 20% holdback for that specific deal is forfeited. This only affects the individual deal that churned — it does not impact commissions on your other deals or your overall attainment calculation. If you believe the churn was caused by something outside your control (product issue, onboarding failure), you can file a dispute.

**Q4: How does the ramp/draw work?**
For your first 3 months, you have a guaranteed variable floor of $6,250/month. If your actual commission earnings are below $6,250 in a month, you receive $6,250 (the guarantee). If your earnings exceed $6,250, you receive the higher amount. This is a non-recoverable draw — you never have to pay it back. Starting in month 4, the guarantee ends and you are on standard commission.

**Q5: How do accelerators work?**
Accelerators are calculated on a quarterly basis. Once you exceed 100% of your quarterly quota, every additional dollar of ARR earns commission at 1.5x the base rate (40.5% instead of 27%). Above 125%, the rate increases to 2.0x (54%). There is no cap on total earnings. Example: if your quarterly quota is $68,750 and you close $85,000, the first $68,750 earns at 27% ($18,563) and the incremental $16,250 earns at 40.5% ($6,581), for a total of $25,144.

**Q6: What if I give a discount?**
Commission is always calculated on the actual contract value after discount. Up to 10% discount is at your discretion. Discounts above 10% require founder/CEO approval. A 15% discount on a $15k deal means you earn commission on $12,750 instead of $15,000 — that costs you about $607 in commission. Selling at full price is always more lucrative for you.

**Q7: What about multi-year deals?**
Commission is paid on first-year ARR only. If a customer signs a 2-year contract, you earn commission on the Year 1 value. The multi-year commitment benefits the company (lower churn risk), and any discount given for the longer term reduces your commission basis proportionally.

**Q8: What happens to expansion/upsell revenue?**
Under this plan, expansion revenue on existing accounts is not creditable to AEs. Expansion is managed by founders/CS during year one. If you source and close an expansion within the same quarter as the original deal, it may be credited at founder discretion — ask before assuming.

**Q9: What if I'm on leave or the plan changes mid-quarter?**
For leaves longer than 10 consecutive business days, your quota is prorated. If the comp plan changes mid-quarter, any deal in advanced stages (proposal sent or later) at the time of the change notice is grandfathered under the old plan for 30 days.

**Q10: Something looks wrong on my commission statement. What do I do?**
Email [founder/CEO] within 15 business days of receiving your statement. Include the deal name, the amount you believe is incorrect, and your calculation. You will receive a resolution within 10 business days.

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## 10) Risks, Open Questions & Next Steps

### Risks

| Risk | Likelihood | Impact | Mitigation |
|---|---|---|---|
| Pipeline insufficient to support quota | Medium-High | AEs miss quota, morale drops, turnover risk | Founder must commit to pipeline support during ramp; track pipeline coverage weekly; adjust quota at 90-day mark if needed |
| 90-day holdback creates friction with candidates | Low-Medium | Harder to recruit first AEs | Frame holdback as quality alignment, not punishment; the 80/20 split is industry-standard; emphasize the non-recoverable draw during ramp |
| ACV assumption is wrong (deals are smaller/larger) | Medium | Quota is too easy or too hard | Track actual ACV monthly; recalibrate quarterly |
| Churn is driven by product, not sales | Medium | Holdback punishes reps unfairly | Dispute process addresses this; track churn reasons rigorously; if >50% of churn is product-driven, consider removing holdback and addressing root cause |
| Accelerators cost more than expected | Low | Budget overrun in a high-performance quarter | 2.0x cap at 150%+ limits tail risk; at seed stage, over-performance is a good problem; model max exposure quarterly |
| Plan is too simple and needs more mechanics as team scales | High (by EOY) | Requires plan redesign | This is expected. Plan is intentionally simple for 2 AEs. Redesign triggers: adding SDRs/AMs, adding overlays, adding territories, team > 5 reps |

### Open Questions

1. **What is the actual pipeline source mix?** The plan assumes 60/40 marketing-sourced vs. AE-sourced. If AEs must self-source >50% of pipeline, ramp quotas may need to be lower.
2. **Who owns onboarding/implementation?** If AEs are expected to do basic onboarding handoff, this affects their selling time and quota capacity. Clarify the post-sale handoff process before AE start date.
3. **What CRM are you using?** The plan assumes standard CRM fields (Salesforce, HubSpot, etc.). Confirm the system of record and ensure required fields exist.
4. **Do you plan to hire SDRs in 2026?** If SDRs are added mid-year, define credit-splitting rules before they start.
5. **What is the legal review process?** This plan is a comp-plan specification, not a legal document. Have employment counsel review before presenting to AE candidates, especially the holdback provision and draw terms.

### Next Steps (30-90 Day Validation Plan)

| Timeframe | Action | Owner |
|---|---|---|
| Before AE hire | Have employment counsel review plan for compliance | Founder |
| Before AE hire | Configure CRM with required fields (see Section 8a) | Ops / Founder |
| Before AE hire | Build commission tracking spreadsheet or tool | Ops / Finance |
| Week 1 (AE start) | Walk AEs through one-pager + FAQ; answer questions; have them sign acknowledgment | Founder |
| Day 30 | Review: pipeline coverage, activity levels, first opportunities created | Founder + AEs |
| Day 60 | Review: first deals closing, commission statement accuracy, any disputes | Founder + Finance |
| Day 90 | **Major checkpoint:** actual vs. plan on ACV, win rate, cycle length, pipeline coverage. Recalibrate quota if any assumption is >20% off. First holdback releases due. | Founder + Finance + AEs |
| Quarterly | Review plan economics: comp-to-bookings ratio, accelerator costs, holdback forfeitures, churn rates | Founder + Finance |
| Month 6 | Evaluate whether plan structure should change for H2 (adding roles, adjusting rates, etc.) | Founder |

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## Quality Gate — Self-Assessment

### Checklist Results

| Checklist | Status |
|---|---|
| 1) Scope + clarity | PASS — Roles defined (AE only), primary metric defined (net new ARR), crediting rules explicit, plan fits on one page |
| 2) Incentive alignment | PASS — Rewards qualified closes, discourages discounting (actual-ARR basis), discourages bad-fit deals (90-day holdback), one primary metric |
| 3) Economics + finance | PASS — Modeled under low/base/high scenarios, accelerators bounded (2.0x max), discount guardrails in place |
| 4) Ramp + fairness | PASS — 3-month ramp with non-recoverable draw, prorated quota, leave/territory-change rules defined |
| 5) Retention/quality alignment | PASS — 80/20 holdback with 90-day window, dispute process defined, fairness check performed |
| 6) Operability + governance | PASS — CRM fields listed, payout process documented, dispute/exception process with single owner, change control defined |

### Rubric Scores

| Dimension | Score | Justification |
|---|---|---|
| 1) Clarity + simplicity | **2** | One primary metric, plan fits on one page, rep can estimate payout mentally, minimal exceptions |
| 2) Role controllability | **2** | ARR bookings are fully within AE control; holdback is justified by AE influence on 90-day retention; dispute process handles edge cases |
| 3) Incentive alignment (anti-gaming) | **2** | Discount guardrails, actual-ARR commission basis, 90-day holdback, no incentive to stuff bad deals |
| 4) Economic viability | **2** | Low/base/high scenarios modeled, accelerators stress-tested, comp-to-bookings ratio is high but appropriate for seed stage |
| 5) Ramp realism | **2** | 3-month ramp with escalating quota, non-recoverable draw, activity-based expectations early |
| 6) Retention/quality alignment | **2** | 80/20 holdback with clear window, trigger, data source, dispute process, and fairness check |
| 7) Operability + governance | **2** | CRM fields defined, payout process documented, dispute resolution has escalation path, change control policy with notice periods |
| **Total** | **14/14** | Ship-ready (threshold: 10/14, no dimension at 0) |

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*This document is a comp-plan specification and set of operational guidelines. It is NOT a legal agreement. Have qualified employment counsel review this plan before presenting it to candidates or employees, particularly the holdback provision, draw terms, and termination rules. State-specific regulations (e.g., California wage laws) may require modifications.*