Heads-up

Experienced sales professionals know that commission plans must be tailored both to motivate Commission_Recipient and to protect Commission-Payer’s interests. (A software-industry sales exec once remarked that sales people are “heat seekers” who responded directly to compensation.)

A quick Web search will reveal any number of articles with suggestions on how to design a commission / compensation comp plan. See, e.g., Brooks Fenno, Sample Sales Commission Plan (accessed Sept. 3, 2007).

Applicable law, especially in non-U.S. jurisdictions, may affect a company’s right to claw-back commissions. See generally Donald C. Dowling, Jr. (White  Case), Global Compensation/Bonus Plan Checklist, April 2007 (accessed Oct. 19, 2007).

Pricing authority

It may be helpful to state that Commission-Payer has exclusive authority over pricing decisions, in the interest of making it clear that there is no “resale price maintenance” going on (which could have antitrust implications).