1. Pay curve examples

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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