shyke

Enterprise AE

Valued Contributor

Is it normal to hold commissions above 100% OTE til the end of the year?

Question - reviewing an offer for high growth Saas startup - raised series A

Contract states that max commission payout mid-year is 100% OTE per quarter, and at year end, remainder of commissions + accelerators are paid out.

For example, if I hit 120% of target, I only get paid commissions for 100% of target , remaining commission for that 20% is held out til end of year.

In past I have always received full commission plus quarterly accelerators at quarter end. Seems they want to hold overachievement commissions until end of year and accelerators on annual target only instead of quarterly.

I am perhaps okay with accelerators being paid out on annual target at year end, but not okay with commissions above 100% being held til year end as well.

Questions:

Has anyone seen this where commissions (not including accelerators are held to year end?
For Sass, is it common for accelerators to be put on annual target and paid year end, or are mostcompanies paying accelerators quarterly?

Thanks!!!

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🍾 Commission

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29 comments

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CuriousFox

WR Officer

11

🦊

I don't think there's anything normal about series A companies 🤷‍♀️

CPTAmerica

Opinionated

1

President/CRO

this is the answer

HVACexpert

Politicker

4

sales engineer

Yeah I would check your contract to make sure they stuff you sell they would still have to pay you out on if you’re laid off or fired. I feel like they could use this to hold you or your sales hostage.

Diablo

Politicker

3

Sr. AE

I haven’t seen this. We get paid the very next month after clients paying the invoice. Our accelerators are quarterly.

poweredbycaffeine

WR Lieutenant

3

☕️

Well, the company gets to hold cash until EOY, making them long stronger for funding and/or debt financing.

Seems like a nice nest egg to build for the end of the year, but I feel like I'd be jaded to wait for my jackpot to hit my account.

punishedlad

Tycoon

5

Business Development Team Lead

And there's always the chance that the Series A goes under or lays you off just before the year end to avoid just such a pay out...

oldcloser

Arsonist

4

💀

Yeah, I'm calling this practice somewhere between just plain shitty and very much fucked.

SoccerandSales

Big Shot

2

Account Executive

Biggest concern is if you leave before EOY are they going to try and hold that commission?

Kosta_Konfucius

Politicker

2

Sales Rep

I have worked at on place that would do that but it would be capped at 125% for YTD and QTD.

braintank

Politicker

1

Enterprise Account Executive

Never seen this before. Seems odd.

FinanceEngineer

Politicker

1

Sr Director, sales and partnerships

1. No.
2.Yes, but paid in normal commission payment times.

Check your contract.

Sunbunny31

Politicker

1

Sr Sales Executive 🐰

I have not seen this or heard of this before. But nothing surprises me with Series A.

I think pbc is onto something.

HappyGilmore

Politicker

1

Account Executive

This seems odd for a company to do

Pachacuti

Politicker

1

They call me Daddy, Sales Daddy

Its a way to keep you from making a HUGE sale and then jumping ship the moment you get paid.

Justatitle

Big Shot

1

Account Executive

Not normal, but if they are agreeing to pay you and put it in writing then I’m not too worried

Maximas

Tycoon

0

Senior Sales Executive

Never witnessed a commission payment delay till the end of the year tbh.
And I believe that most companies are paying the accelerators annually so that's normal!

salesboi22

Politicker

0

Head of Growth

Absolutely not

FoodForSales

Politicker

0

AE

Great way to see a mass exodus on Jan 1.

MrMonte

Arsonist

0

Head of Sales

I’m not saying it’s ok, but I’ve seen it in multiple companies. Their argument is usually that they follow GAAP and pay out commissions as they recognize revenue. I think (could be wrong) this is because they are concerned about cash flow, and what they would be on the hook for if reps crush quotas. This is something I have negotiated away from, but not as a SDR or AE. Only at the director level or higher.

0

Vice President of Sales Americas

I would not endorse this practice...and I've never seen a plan that did

YoursTruly

Politicker

0

Account Executive (SaaS)

They’re cash sensitive and want to hold as much liquidity as possible. Its not common and unless theres a clause saying you get paid out at termination, you’re up shit creek if you leave before year end.

ROATL

0

RevOps Manager

Cash liquidity is a big part, the other is Series A has a ton of variance, if you kill an uncapped comp plan one quarter and do awful the next you can get paid over OTE for subpar performance with certain accelerators.

Valueselling

Member

0

Managing Director

In every company, they try to execute what they have agreed with employees by written. You are always free to accept / Reject the T´s and C´s and whether it is normal or not, you won't change it as you accepted. It typically drives into frustration to find out about some others´conditions as it might make you think the grass is always greener at the other side, which it is not.

There are always pros and cons in every contract and series A companies pay beyond the line and risk is hight as well.

My suggestion, if I may, is to accept the conditions and ignore someone's else's conditions.

Retain cash till year end makes total sense. You might have earned beyond 100 % of your salaries before the year end. I would accept such gift as better than most of my colleagues / market professionals and enjoy your job as much as you can.

In Europe, we stay at companies between 5 and 20 years. Looking at such a short term does not make much sense to us.

In a nutshell : it is mot related to how you deal with the situation and not to others conditions.

Hope it was helpful

Chuchu

0

Account Executive, Staff

@shyke- Yes, and no. At our company it'll depend, if it's just a few $Ks it'll be paid on the next commission payday. That being said, when I had over $100k to be paid at one commission cycle, they decided to hold that sum and pay at the end of the year.
*Yes, they're authorised to do so as it has specific language in the contract mentioning it's in their discretion to decide when to pay out accelerators and over 100% target.
**Yes, they paid it in full at the end of the year and within the same tax year.
***Working at one of the largest software companies (ranked 13th)

Valueselling

Member

0

Managing Director

Thanks for your comment

First of all, let me congratulate you as it looks you are very successful at your sales job

I worked in sales 30+ years in different roles, always SW, HW and saas. Their conditions differed. All of them being market leaders and with very stablished and procedure-based payment terms

Younger companies have more flexibility not because they want to do anything wrong for their employees, but because they need their flexibility till they figurate what their cash flow has to be to ensure the business run smoothly

All that said, I used to overachieve and never had may commissions or accelerators held till year end but the contract neither said so.

Once again, not being a common practice, paying at year end is what you have, but in the meantime enyoy your good selling, keep on track and concentrate on the things you can manage and try not to dedicate much time on things that don't depend on you. It is a good practice if you want to keep a good mental health selling all your live long, I can tell !!

Chuchu

0

Account Executive, Staff

Cheers! Always good to have a reminder of such, especially from a veteran!

0

Senior Account Executive

I have never seen that, and don't consider it normal.

What I would be afraid of is the company adjusting the comp plan or letting an AE go if they blew the comp plan out of the water so they would not have to pay the amount over 100%.

FranchiseSalesQB

Politicker

0

Franchise Sales QB

I wouldn't say its "normal" but not bad for that kind of startup. Only thing that sucks is no guarantee you'll ever see those commissions. Companies seem to always find a way to not pay you.

zwrightsyft

Good Citizen

0

CRO

To think from their perspective, CA$H is king at a series A company. I would try to counter to say you want to get paid commissions / Accelerators (good for you by the way) when cash is collected. For example: if a customer is paying semi-annually, you would get half of your commission N30 and the rest when the customer pays their second payment. Your argument to leadership is it will promote sellers to try to get cash upfront for the year, which is more healthy for the business. Make it a win-win.

This could be a healthy compromise, however, I've never been at a company where the comp plan was negotiable...Best of luck!

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