StalledDeal

Enterprise Account Executive

Uncapped Commission being capped

Fellow sales warriors, I was wondering if you have ever seen your commission - or someone else's - being capped because the company found that you earn too much.

I have experienced two instances where the rep sold a massive deal and the company decided to cap the commission. In many comp plans the company states that it has the right to change the comp plan at their discretion.

In one specific example at one of the biggest SaaS vendors a rep closed a $7m ARR deal which would earn the rep a 20% commission based on the comp plan resulting in a $1.4m paycheck. Although everyone was aware of the deal including senior management, finance decided not to pay out the complete amount but capped it at €600K by adjusting the comp plan at their discretion.

So if you're working on a deal that could be life changing, make sure you secure this deal both externally and internally including how it's paid out. In pretty much all cases large deals have full visibility across the company and securing your deal will be paid out in full also is part of your process.

Has anyone of you experienced this as well?

🍾 Commission

☁️ Software Tech

11

13 comments

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detectivegibbles

Politicker

6

Sales Director

I’ve never been at a company that had opps to pay this much.

Point being, I need to be.

CuriousFox

WR Officer

4

🦊

Shit, you and me both Gibbles 😆

braintank

Politicker

3

Enterprise Account Executive

It sucks but most plans have some "windfall" clause

GDO

Politicker

0

BDM

just rediculous. tbh

detectivegibbles

Politicker

2

Sales Director

antiASKHOLE

Tycoon

2

Bravado's Resident Asshole

THat sounds terrible man. I hope you get what you deserve

dflynn

Executive

2

Client Director

Seen it. Done it. Sorry.

It’s not common but at times the economics of a deal change at scale, and if that scale was not anticipated by management when they made the comp plan, there may be reason to adjust.

Example: Sell a deal to a US customer. They live you and decide to grow the deal by 10x, but they need it in APAC, EMEA, LATAM, and US. So the US rep wants that coin, totally get it, but they are not actually helping grow the business in these other markets where we then need to hire staff in the customer success space. Should the US rep wet their beak on that growth? Sure they should. But not at the full commission. Too much support, too many other employees making that deal work, and they need to get paid as well.

Sunbunny31

Politicker

2

Sr Sales Executive 🐰

Yep, it's very common to have the big deal clause. I'd bet that all the major tech companies have this in play. This is one reason why having a great manager to manage inter-company negotiations is key; they'll go to bat for the rep and while they won't ever be able to secure the entire amount, they can make sure the rep gets a decent payout.
(and here's one other reason I'm super glad I'm anonymous). It happened to me years ago. I was an overlay (basically a specific product specialist). Our team pretty much closed all our deals in the last month of the FY, and ended up at 150% of the number, including one multi-million dollar deal. Let's just say there clearly was a mistake made in sales comp; I was to be paid out on every deal closed, with the same accelerators as a specialist that an IC was to receive - additional % for every million over quota, and we were many millions over quota. I plugged the numbers into my company-designed commission spreadsheet, saw the number, and just knew there was absolutely no way that was going to happen. And then I waited to see how the company would handle it. Sure enough, about a day later, in comes the email invoking the big deal clause and clawing that back to a measly number. Problem was, that also extended to the quota retirement, which put me under my number, and under quota for the year. This also was not going to fly, because that was patently unfair. Fortunately, the SVP who hired me went to bat and negotiated a pretty decent amount that I could live with, and was able to explain to my satisfaction why it wasn't higher (had to do with the next year review of "expensive" employees and I wanted to be below the line and FUTR), and I managed to come in over quota and land a massive check. That said, it was stressful to manage and really disappointing that they'd not thought my comp through appropriately to put me in the position in the first place, and that they would even think that penalizing me for being successful by putting me below quota would be acceptable.
I also know of a rep who was the salesman of the year because he completely dominated the market - and he got the big deal clause invoked on him as well, which took millions out of his pocket. It's crazy stuff, but big companies do not want reps making more than C-level execs.

Diablo

Politicker

1

Sr. AE

I don’t know the answer because I haven’t experience anything like this (far from that number 🙃) but what happened is not pleasant. Did the rep not talk with his manager when this was about to happen ?

StalledDeal

Contributor

1

Enterprise Account Executive

The manager looked at it and just ignored. The rep had to accept because the comp plan stated it was subject to change at any time.

FinanceEngineer

Politicker

1

Sr Director, sales and partnerships

I have seen the accelerators get pushed out, but only heard about capping when the rates aren’t structured that way. Usually they pay out and then alter the levels for different rates.

Justatitle

Big Shot

1

Account Executive

Have heard of capping in various different ways.
- Capped total comp above 250%- capped accelerators
Most commission plans have what is called a windfall clause in them. If you don't want to be blindsided make sure you talk with you management to ensure you won't be before hand

HVACexpert

Politicker

1

sales engineer

The bigger companies will always hide the “large sale = cap commission clause” in a comp plan for you to sign. Sucks but it’s part of the corporate shit.

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