Bonus Programs

Target Incentive Bonus Plan

Participant's target incentive of $[AMOUNT] shall be earned based on attainment against the assigned quota target. Payout shall be calculated using the formula: Target Incentive x Payout Factor, where the Payout Factor is determined by the Attainment Schedule. At 100% attainment, Payout Factor equals 1.0 (100% of target incentive earned). Below [THRESHOLD]% attainment, Payout Factor equals 0.0. Payout Factors between threshold and target are linearly interpolated.

Milestone Kicker Bonus

In addition to the base incentive plan, Participant shall be eligible for a milestone bonus of $[AMOUNT] upon achieving [X]% attainment against the primary quota measure within the measurement period. The milestone bonus is a one-time, non-recurring payment that does not affect base plan calculations, accelerator tiers, or attainment percentages. The milestone bonus is payable in the period in which the qualifying attainment is first achieved.

Multi-Component Uncapped Bonus

Participant shall earn incentive compensation from [N] independent components, each with its own target and payout schedule. Component payouts are calculated independently; over-performance on one component does not offset under-performance on another. Each component is individually uncapped. Total incentive compensation is the sum of all component payouts. Components: (a) [MEASURE_1] at $[TARGET_1]; (b) [MEASURE_2] at $[TARGET_2]; (c) [MEASURE_3] at $[TARGET_3].

TI-Bonus Calculation

// Target Incentive Bonus formula
TARGET_INCENTIVE = $42,000  // variable comp at 100%
ATTAINMENT = ACTUAL_REVENUE / QUOTA_TARGET

// Payout Factor schedule
IF ATTAINMENT < 0.70: PF = 0.0
ELIF ATTAINMENT < 1.00: PF = (ATTAINMENT - 0.70) / 0.30  // linear ramp 70-100%
ELIF ATTAINMENT < 1.25: PF = 1.0 + (ATTAINMENT - 1.00) * 2.0  // 2x acceleration
ELSE: PF = 1.50 + (ATTAINMENT - 1.25) * 3.0  // 3x acceleration

BONUS_PAYOUT = TARGET_INCENTIVE * PF

Bonus vs Commission Break-Even

// When does TI-Bonus equal TI-Commission payout?
TI_BONUS = TARGET_INCENTIVE * PF(ATTAINMENT)
TI_COMM = REVENUE * COMMISSION_RATE

// Break-even attainment:
BREAK_EVEN = TARGET_INCENTIVE / (QUOTA * COMMISSION_RATE)
// If break-even > 1.0: bonus pays more below quota
// If break-even < 1.0: commission pays more below quota

// Rule of thumb: Bonus favors consistency;
// Commission favors variance

Copy & paste into your AI assistant

You are a sales compensation analyst. I need to design a bonus plan for a [ROLE TYPE] role that doesn't use per-dollar commission. Context: - Role: [ROLE TYPE] with OTE of $[AMOUNT] ([BASE/VARIABLE SPLIT]) - Primary measure: [MEASURE — e.g., Gross Retention Rate, NRR, Team Revenue] - Current plan: [DESCRIBE — e.g., flat commission, no variable, existing bonus] - Should the plan be capped or uncapped? Please: 1. Recommend TI-Bonus vs TI-Commission with rationale for this role 2. Design the payout factor schedule (threshold, target, acceleration, cap) 3. Model payouts at 70%, 85%, 100%, 120%, and 150% attainment 4. Recommend whether to add a milestone kicker and at what level 5. Compare total comp cost to a pure-commission alternative 6. Draft the bonus plan section of the compensation document

SaaS — Customer Success Bonus Plan Design

A 60-person CSM team was on a flat commission plan: 2% of retained ARR. The problem: CSMs managing $5M books earned $100K in commission regardless of retention quality, while CSMs managing $2M books earned $40K — the payout reflected book size, not performance. The comp team redesigned with a TI-Bonus: $42K target incentive (80/20 mix on $140K OTE), payout factor from 0x at 85% gross retention to 2.0x at 115% retention. They added a $5K milestone kicker at 100% retention. The formula rewarded retention quality, not book size.

Gross retention improved from 88% to 93% in the first year. CSM voluntary attrition dropped from 24% to 12% — reps on smaller books felt fairly compensated. Total comp cost was 3% higher than the commission plan but the 5-point retention improvement represented $4.2M in preserved ARR.