Glossary
Sales compensation, term by term.
51 terms a comp team, a controller and an auditor use at each other, defined plainly, most of them linked to the guide that goes deeper.
- Accelerator
- A higher commission rate that applies above a point on the payout curve, usually 100 percent of quota. The reason comp plans are convex and forecasts based on a blended rate are wrong. Read more →
- Adjustment
- A payment line that corrects a month already paid. Positive or negative, tagged with the month it corrects and the component it belongs to, paid in the next open month. Read more →
- Amortization period
- Under ASC 340-40, the period over which a capitalized commission is expensed: the expected customer life, including likely renewals, unless renewal commissions are commensurate. Read more →
- As-of join
- Matching each deal to the version of a table that was in effect on the deal's date. How a rate table pays January on January's bands after a July change. Read more →
- ASC 340-40
- The US GAAP subtopic on costs to obtain a contract. Incremental commissions are capitalized and amortized rather than expensed when paid. Read more →
- Attainment
- Credited performance divided by quota, as a percentage, for a period or year to date. The input to the payout curve.
- Attainment curve
- The distribution of reps or rep-component pairs by attainment band, with the money paid or moved at each band. Where you look for a cliff before changing a threshold. Read more →
- Audit pack
- A zip generated at close containing the control results, the payroll file, signed plan documents, checklist evidence and a manifest of hashes. Evidence for SOX testing. Read more →
- Bookings
- The value of contracts signed in a period. The usual denominator for comp cost of sales.
- Cap
- A ceiling on what a component or a plan pays in a period. Saves money and tells your best rep to stop selling.
- Capitalization
- Recording a commission as an asset to be expensed over time rather than as expense in the month paid. See ASC 340-40. Read more →
- Clawback
- A negative adjustment the plan said in advance could happen, usually when a deal is cancelled or unpaid within a window. Read more →
- Close (period close)
- The sequence of tasks that turns a month's data into paid commissions: import, calculate, audit, review, lock, pay, send statements. Read more →
- Comp cost of sales
- Commission paid over booked revenue, per period. The ratio that says whether a plan is healthy, as long as deals are counted once in the denominator. Read more →
- Component
- One payable element of a plan with its own measure, quota and payout curve, such as ACV commission, new-logo kicker or an H1 bonus.
- Crediting
- The rules that decide which payees receive credit for a deal and how much. Driven by territory, role and splits, with the deal taking the account's territory as of its date.
- Draw
- An advance against future commissions, recoverable or not, usually during a ramp.
- Effective date
- The date from which a version of a rate table, quota or plan applies. Versions with effective dates are how history stays reproducible. Read more →
- Fork (scenario)
- An isolated copy of the data set and the plan logic on which a change is modeled. The live plan is never touched; the baseline is the production run. Read more →
- ICM
- Incentive compensation management: the process and software for designing, calculating, paying and governing variable compensation.
- Inquiry
- A rep's question or dispute about a statement line, raised from the statement, Slack or email, carrying the calculation with it into the comp team's queue. Read more →
- Kicker
- An extra payout triggered by a deal attribute: a new logo, a 36-month term, a product line. Also called a SPIFF when short-lived.
- Lock
- A snapshot of every payment line at the moment a month went to payroll. What was paid. Never overwritten; later changes pay as adjustments. Read more →
- Maker-checker
- A control requiring that the person who makes a change is not the person who approves it. Applied to data changes, adjustments and capitalization runs.
- MBO
- Management by objectives: a component paid on goals agreed with a manager rather than on bookings.
- MCP
- Model Context Protocol, the standard that lets an AI client such as Claude read a system through tools. Incentives.guru exposes a read-only MCP server keyed per user.
- Monte Carlo forecast
- Simulating a quarter thousands of times with each deal closing or not by its probability, then running the plan on each outcome. Gives a distribution of commission cost, not one number. Read more →
- OTE
- On-target earnings: base salary plus the variable pay a rep earns at exactly 100 percent of quota.
- P50 / P90
- The median and 90th percentile of a forecast distribution. Plan to the P50, budget for the P90. Read more →
- Pay mix
- The split of OTE between base and variable, such as 50/50 for an account executive or 70/30 for a customer success manager.
- Payee
- Anyone paid under a plan: reps, managers, overlays, specialists. Also the unit of pricing here: $30 per payee paid in the month.
- Payroll file
- The text file, in the shape the HR system expects, that carries locked commission payouts into payroll. Read more →
- Plan document
- The document a rep signs that states their plan, quota and components for the year. Frozen with a hash once signed; a plan change is a new document. Read more →
- PPA
- Prior-period adjustment. See adjustment. Read more →
- Proration
- Reducing a quota or target for the part of the period a payee did not hold the seat: hires, leaves, terminations. Best written as a policy and applied by the system. Read more →
- Promotion (scenario)
- Turning a modeled change into production. For a rate table change, a new version effective from the chosen month. Read more →
- Quota
- The performance target against which attainment is measured, for a period and a component.
- Quota planning
- Allocating a company number down the territory tree to reps, with proration and overrides, so the quotas add up to the number the board gave you. Read more →
- Ramp
- Reduced quota or guaranteed pay during a new hire's first months.
- Rate table
- The bands of a payout curve: attainment from and to, pays from and to. Held outside the calculation steps, versioned by effective date. Read more →
- Roster
- Who holds which seat, in which plan, for which dates. Membership in a plan is computed from the roster, not typed in.
- Scenario
- A forecast or plan change modeled on a fork and priced against the live plan. Comparable, shareable, promotable. Read more →
- Sign-off
- The final close task, refused while any required task is open. What lets the audit pack say the close was complete. Read more →
- SOX
- The Sarbanes-Oxley Act. Section 404 requires management to show that material numbers, commissions among them, came out of a controlled process. Read more →
- SPIFF
- A short-term incentive on a specific product, deal type or period. A kicker with an end date.
- SPM
- Sales performance management: ICM plus territory and quota planning, usually sold as a suite.
- Split
- Dividing credit for one deal among several payees, by percentage.
- Statement
- The rep's view of a period: components, attainment, tiers, deals, adjustments and history, every line openable to its calculation. Read more →
- Territory
- The set of accounts a rep or team owns, usually by geography, segment or named list. Deals take the account's territory as of the deal date.
- Threshold
- The attainment below which a component pays nothing. The lever that saves the most money and causes the most revolt when moved. Read more →
- Tier
- One band of a rate table. Marginal tiering pays each band's rate on the attainment inside it; cumulative tiering pays the top band's rate on everything.