Pay Structure
3 terms in Sales Plan Design
Base Bay
#Base pay (sometimes called base salary or base bay) is the fixed, non-contingent cash compensation paid to a sales employee on a regular schedule regardless of individual or organizational performance. In SPM, base pay is one of two components that define total cash compensation, the other being variable or incentive pay. The ratio of base pay to target variable pay — the pay mix — is a fundamental plan design decision that signals the degree of performance-sensitivity built into a role: a 50/50 mix places half of OTE at risk, while an 80/20 mix provides high income security with modest upside. Base pay must be set at a level that covers the essential living and financial security needs of employees in each role and market, supports legal compliance with minimum compensation requirements, and remains competitive within the labor market for the relevant sales role. In plan design, base pay is typically held constant across a performance period and is not subject to accelerators, caps, or recoveries — those mechanics apply exclusively to the variable component.
A Mid-Market Account Executive has an OTE of $180,000 on a 60/40 pay mix. Her base pay is $108,000 ($9,000 per month), paid semi-monthly regardless of quota attainment. Her target variable pay is $72,000 annually, paid quarterly based on quota attainment. In a quarter where she achieves 75% of her $450K quarterly quota, she earns her full base ($27,000 for the quarter) plus $40,500 in variable pay (75% of $54,000 quarterly target), for total Q1 cash compensation of $67,500.
Section 3.1 — Base Salary: Each participant's annual base salary shall be established at the time of hire or plan enrollment and documented in the participant's compensation agreement. Base salary shall be paid on the company's standard bi-weekly payroll schedule and shall not be subject to recovery, clawback, or adjustment based on sales performance outcomes. Base salary changes resulting from promotion, market adjustment, or annual review shall be effective-dated and shall not alter the variable compensation terms for the current performance period unless a new plan agreement is executed.
The Pay Mix and OTE Distribution Report shows, for each title and level, the number of participants, median base salary, median target variable, effective pay mix ratio, and total OTE — allowing HR Compensation Partners to verify that all active plans fall within the approved pay mix bands for each role and to flag outliers where individual base salaries have drifted outside the targeted range for their title-level combination.
Incentive Target
#An incentive target is the predetermined performance threshold a salesperson must reach to earn variable pay, serving as the central calibration point around which the entire incentive plan is engineered. Unlike a quota — which measures expected performance — an incentive target is the anchor of the pay curve: performance at exactly 100% of target should deliver the targeted incentive amount (TIA) specified in the plan. Targets can be expressed as revenue, units, margin, new logos, or any composite metric. Organizations set targets using historical attainment, market growth rates, territory capacity analysis, and top-down revenue goals. A well-constructed incentive target is stretching but achievable: industry benchmarks suggest 60–70% of the eligible population should achieve or exceed target in any given performance period, ensuring plan credibility and motivational integrity.
A SaaS account executive carries a $1,200,000 annual revenue quota, with an incentive target of $80,000 at 100% attainment. The plan specifies that earning the full $80,000 TIA requires closing exactly $1,200,000 in new ARR. Attaining 80% of quota ($960,000) pays $56,000, while 120% attainment ($1,440,000) pays $112,000 under a 1.4x accelerator.
Participant's Incentive Target Amount (ITA) is $80,000 USD per plan year. ITA is earned in full upon achievement of 100% of the assigned Revenue Quota. ITA is prorated linearly for performance between 50% and 100% of quota, with no payment below 50% attainment. Performance exceeding 100% of quota earns incentive at an accelerated rate per the Pay Curve schedule in Section 4. ITA is subject to revision upon territory realignment or quota adjustment pursuant to Section 7.
The Incentive Target vs. Attainment Summary report displays each participant's ITA, YTD quota attainment percentage, earned incentive to date, and projected full-year payout versus ITA, segmented by role and region. The report flags participants below 70% attainment as 'At Risk' and above 120% as 'High Performers' for management review.
Percentage Split
#Percentage split has two distinct but related meanings in SPM. The first meaning — shared credit split — applies when two or more salespeople jointly influence a single transaction. The split defines how much credit each participant receives, ensuring total credits equal 100% (a zero-sum split) or, under overlay or team selling models, may sum to more than 100% (a non-zero-sum or full-credit split). The second meaning — pay mix split — describes the structural ratio of fixed base salary to target variable pay within total target compensation (TTC). A 60/40 split signals a relatively stable role with moderate leverage; a 50/50 or 40/60 split reflects a highly variable, sales-driven role. Both types of split are governed by plan documents and must be administered consistently to avoid disputes and pay inequity.
On a $500,000 enterprise software deal co-sold by an Inside Sales Rep and a Field Account Executive, a 40/60 credit split awards $200,000 in quota credit to the inside rep and $300,000 to the field AE. Separately, the AE's compensation plan carries a 50/50 pay mix: a $120,000 base salary plus a $120,000 target incentive, totaling $240,000 TTC.
Where a sale involves two or more Eligible Participants, Sales Credit shall be allocated according to a Percentage Split documented in the applicable Deal Registration System prior to booking. The sum of all splits on a single transaction must equal 100% unless the plan document expressly authorizes full-credit overlay participation. Split allocations require approval from both participants' managers and must be finalized within five (5) business days of order close. Unauthorized split modifications after booking are not permitted.
The Split Transaction Audit Report lists all transactions during the period where quota credit was divided among multiple participants, showing deal ID, total deal value, each participant's name and role, assigned split percentage, credited amount, and approving manager. The report is used by Compensation Operations to validate that split totals equal 100% and that all required approvals were obtained before payroll processing.
Test Your Knowledge
0 of 3 correctWhich term does this describe?
______ has two distinct but related meanings in SPM. The first meaning — shared credit ______ — applies when two or more salespeople jointly influence a single transaction. The ______ defines how much…