Pay curve examples

Stepped Incentive – Bonus Plan When you might use this Annual incentive plan (if we achieve target we earn “x”) Base salary is high Advantages Highly predictable payment outcome. Easy to understand and explain Should be “self funding” Disadvantages “One size fits all” No compensation below target is a problem if base is not competitive $xxx bonus Base 100% target achievement Sales person is paid a salary plus a bonus at goal attainment

Straight-line Commission Plan When you might use this Classic sales commission plan Advantages Motivation levels increase above target Clear line of sight Disadvantages Pressure on target setting and modelling accuracy 100% goal attainment Sales person is paid a salary plus a % of OTI up to goal attainment plus accelerated incentive above target Page 3

Progressive Incentive Plan with a near target hurdle 50% 100% 150% 70% 200% % of OTE % of target When you might use this Classic sales incentive plan model where there is base + variable Advantages Highly predictable payment outcome Easy to understand and explain Disadvantages “One size fits all” Sales person is paid a salary plus a % of OTI up to goal attainment plus accelerated incentive above target Page 4

Regressive Plan When you might use this Advantages Disadvantages Where sales targets are well established and it is very difficult to exceed target by more than 10-20% Advantages Tends to cap commission payments above target without having to cap the plan per se Disadvantages Reduced motivation after achieving target – no real incentive to sell after reaching target Incentive to “sandbag” sales – hold over to the next payment cycle? 100% goal attainment Salary Sales person is paid a salary plus 3% of sales to target and 1% for sales over target “uncap lite?” Page 5

Sales person is paid specific amounts for sales achievement Stepped Plan When you might use this There are clearly defined levels of performance across your sales force Advantages Clearly defined payment outcomes are easy to understand Disadvantages Lack of granularity can cause disengagement and/or odd outcomes Salary Sales person is paid specific amounts for sales achievement Page 6

Mixed Plan When you might use this Advantages Disadvantages $10,000 Where “on target performance” is the expected minimum level Advantages Clearly defined payment outcomes are easy to understand Disadvantages Any errors in target setting have a big impact $10,000 bonus Salary Sales person is paid a salary plus $10,000 bonus on goal attainment + 1% for sales above target