Product Info - Free Commission Agreements - Staffing: Account Executive

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Sample Account Executive Sales Commission Agreement Template

Account Executive Compensation Agreement

Revision Date: i____________

This document describes the agreement between between ii_____________________________ (“Company”) and iii_________________________________ (“Payee”) regarding terms related to compensation.
Company and Payee enter into this agreement whereby Payee provides services to the Company and customers of company, in return for compensation specified in this agreement.

Duration:

This agreement covers the period starting from iv_______________ and ends on ________________.
All commissions will be calculated and paid once every month, for the preceding month. Commissions will be calculated and paid out as part of the next payroll cycle, following the month for which commissions are calculated.

Services:

The primary service rendered by this payee is placement of consultants and candidates on a contract/temporary basis or as a permanent hire, at customer locations.

Base Pay:

vPayee is due a base salary of vi______________, payable every vii_________________ at an hourly rate of ______________.

Variable Compensation:

Targeted variable compensation for the full year isviii ______________.

Other Compensation:

Payee will be paid for all travel and lodging expenses related to consulting activities. Auto travel will be reimbursed at the current federal reimbursement rate (Currently 0.54 cents per mile).
Payees will be required to maintain a cell phone as part of conducting sales business. Sales Rep will be provided an allowance of $50 per month for cell phone usage.
Client entertainment expenses will be reimbursed as following:
Meals: Reimbursable with receipts
Special Events: Must be pre-approved. Reimbursable with receipts.
Expenses will be reimbursed within 30 days of being presented with the receipts and a completed expense reimbursement form.

ixContract Placement Gross Profit Commission
This incentive pays commissions for temporary or contract placements. Commissions are paid on gross profit.

Quota:

There is no specific quota.

Credits:

Any placements that are due to the Payee’s primary efforts are eligible for this commission. Commissionable transactions are invoices generated to the customer regarding the particular placement.
Payee gets credit for the Gross Profit when invoices are issued to the customer.x

Calculation:

Calculation is based on the following data available from timesheets and invoices.
Pay Rate - This is the hourly rate paid to a consultant used by the company. This is typically the same rate for a consultant for an extended period of time.
Loaded Labor Cost – This is the hourly cost that is added to the Pay Rate to determine the total cost of a resource to the company. This rate may be the same for all consultants or for classes of consultants.
Bill Rate - This is the rate that a customer is charged for a specific consultant. This can be different by consultant. The same consultant can also be provided at different bill rates to different customers.
Revenue - Bill Rate x Number of Hours
Gross Profit - Revenue – (Pay Rate + Loaded Labor Cost) for the number of worked hours, usually a month’s worth.
Gross Margin - (Revenue – (Pay Rate + Loaded Labor Cost)) / Revenue for the number of worked hours, expressed as a percentage
Commission amount is calculated as a percentage of Gross Profit on customer invoices. Commission rate varies based on Gross Margin as follows
Gross Margin                Commission %
0 – 20%                            10%
21% - 40%                        15%
40% and above                  20%

Example:

Timesheet billings for a specific consultant are as following:
Invoice Hrs Cost Bill Revenue Gross Gross
Rate Profit Margin
1 100 $60 $100 $10,000 $4,000 40%
2 100 $50 $100 $10,000 $5,000 50%
In this case commissions are calculated as follows.
Invoice Gross Gross Comm. Comm.
Profit Margin Rate Amt
1 $4,000 40% 15% $600
2 $5,000 50% 20% $1,000

xiPermanent Placement Revenue Commission

This incentive pays commissions for permanent placements. Commissions are paid on revenue. Revenue is generally fees charged to the customer for a placement.

Quota:

There is no specific quota.

Credits:

Any placements that are due to the Payee’s primary efforts are eligible for this commission. Commissionable transactions are invoices generated to the customer regarding the particular placement.
Payee gets credit for the revenue when the invoice has been paid.xii

Calculation:

Calculation is based on the revenue available from invoices.
Commission amount is calculated as a percentage of revenue on customer invoices. Commission rate for this incentive is 20%.

 

Example:

Commissions’ calculations for specific placements are as follows:
Invoice Salary Placement Comm. Comm.
Fees Rate Amt
3 $60,000 $15,000 20% $3,000
4 $90,000 $22,500 20% $5,000

Fallout:

If the customer rejects the placement within 60 days of start date of the employee, then the placement is considered to have been a Fallout. Customer fees are returned to customer and commissions paid against the placement will be recovered from the Payee.

Draw

Payee has a draw of $3,000 per month for the three months from hire date. During the period of draw the following draw terms apply:
- Payee will be advanced the amount difference between commissions earned during the month and the draw limit, if commissions earned is less than the draw limit.
- If commissions earned is greater than the draw limit and there is a current draw balance owed to the Company, then the excess amount will be used to pay down the draw balance.
- Draw recovery will continue until draw balance is reduced to zero.

Cap

Total commissions paid out in any one period cannot exceed a limit of $20,000. If commissions earned exceeds the cap limit, the excess amount above the cap limit would be retained by the Company. This retained cap balance would be paid out in future periods, when the commissions earned falls below the cap limit.

Splits

Commissions can be split with other Payees, on a deal-by-deal basis with prior agreement from the company.
A spit can be made between one or more Account Executives or between one or more Scheduler. In either case, a split percentage would apply indicating the payee’s share based on involvement.

Termination of Employment

On voluntary or involuntary termination of Payee employment with the Company, commissions will be paid on transactions dated prior to the termination date only. Any amounts owed to the Payee will be according to employment regulations after withholding taxes and other dues.

Other Terms

1. Payee agrees to follow all Federal and Local laws while engaged in providing services to the Company during the period of this agreement.
2. Payee shall not engage in any other employment during the term of this agreement. Company reserves the right to require Payee to terminate any such other employment at Company’s sole discretion.
3. Payee shall use the most ethical practices while engaging in any sales activity.
4. Payee agrees to protect all confidential material including prospect data, sales data, and client information belonging to the Company and shall take all reasonable care in making sure that such confidential material is not disbursed to anyone outside the company.
5. This entire agreement shall be governed by the laws of the State of ___________.
Company Payee
_______________________________ ________________________________
By                                                    By
_______________________________ ________________________________
Name                                                Name
_______________________________ ________________________________
Title                                                  Title
_______________________________ ________________________________
Date                                                 Date

 

i This date will give us information as to when this agreement was written and distinguish it from similar other agreements.
ii Fill out the company name here.
iii Fill out the payee’s full name here.
iv Enter the start and end date for the sales commission plan effective period. Most companies use the calendar or fiscal year start and end dates for these values. Some companies may not have an end date specified.
v Alternatively you can remove this section or phrase it such as “Base Salary is specified in a separate employment agreement.
vi Amount of base every payable period.
vii Weekly, Bi-weekly, Twice-monthly, Monthly, etc
viii If there is a targeted compensation for the full year, it can be entered here. Alternatively, this whole section can be removed.
ix This incentive encourages higher levels of gross margin with higher commissions at higher levels.
x Alternatively commission can be due on payment or other events.
xi This incentive pays flat commissions on revenues generated.
xii Alternatively commission can be due on invoicing or other events.