# Executive Compensation

> Canonical GTM compensation strategy — philosophy, role-by-role plans, stage- appropriate OTE, accelerators, SPIFs, and executive gates. VP/CRO offer clauses, variable gates, equity, severance, clawback, and Pavilion-style revenue-quality comp. Grounded in Sam Jacobs (Pavilion), Mark Roberge, McMahon, Bridge Group, and CRO Council benchmarks. Use when designing comp plans, OTE/quota, annual comp review, VP/CRO offers, or board comp approval. Triggers on: "GTM comp strategy", "comp plan design", "OTE calculator", "quota design", "executive comp", "CRO compensation", "VP Sales offer", "accelerators", "SPIF vs plan change", "Pavilion comp", "Sam Jacobs comp", "revenue leader compensation".

- Skill: `leadmagic/executive-compensation` (Agent Skill, multi-file: 15 files)
- Install (CLI): `npx skillmds@latest add leadmagic/executive-compensation`
- Raw SKILL.md: https://api.skillmd.com/api/skills/leadmagic/executive-compensation/raw
- Safety review: pending
- Works with: Claude Code, Claude.ai, OpenAI Codex
- Category: Marketing & Growth
- License: MIT
- Author: LeadMagic (https://skillmd.com/u/leadmagic)
- Updated: 2026-09-17
- Page: https://skillmd.com/skills/leadmagic/executive-compensation

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# Executive Compensation

## Overview

**Canonical home for GTM compensation strategy** (IC through CRO). Comp is a
**behavior design system**, not a headline OTE. CRO packages that pay only on
bookings create mercenary quarter-end deals, logo churn, and sandbagged forecasts.
Pavilion's CRO Council — led by **Sam Jacobs** — gates variable comp on **revenue
quality**: net new ARR, NRR, and efficiency (Rule of 40 / EBITDA), not bookings alone.

**Master playbook:** `references/gtm-compensation-strategy.md` (Pattern 35).  
**Role × stage matrix:** `references/comp-by-role-stage.md`.  
**IC bands + templates:** `gtm-role-descriptions` → `comp-benchmarks.md`.  
**Founder budget / negotiation:** `founder-comp-playbook`.  
**Approval conversations:** `gtm-leadership`. **Legal:** `employment-compliance`.  
**HR GTM ramp handoff:** `hr-gtm-playbook.md` (Pattern 28).  
**Reconcile thresholds:** `references/benchmark-reconciliation.md`.

**Not legal or tax advice.** Every clause requires qualified counsel; state law
varies on non-compete, commission timing, and parachute taxes.

## When to Use

- "Design GTM comp plan" / "OTE and quota design"
- "Annual comp review for sales team"
- "Structure CRO compensation"
- "VP Sales offer letter clauses"
- "Executive severance for sales leader"
- "Equity refresh for CRO"
- "Variable gates for VP Sales"
- "Pavilion-style exec comp"
- "Board approval package for revenue leader"

IC plan templates live in `gtm-role-descriptions`; **strategy and worksheets** live here.

## Step-by-Step Process (Full GTM Comp)

### Phase 0: Load Master Playbook

1. `references/gtm-compensation-strategy.md` — philosophy, role strategies, stage gates
2. `references/comp-by-role-stage.md` — matrix by ARR band
3. `skills/founder-led/gtm-role-descriptions/references/comp-benchmarks.md` (via `gtm-role-descriptions`) — H1 2026 bands
4. `templates/comp-plan-design-worksheet.md` — plan design
5. `templates/ote-calculator-template.md` — quota math + scenarios

Founders: run `founder-comp-playbook` payroll % ARR check before publishing bands.

## Authoritative Foundations

- **Sam Jacobs (Pavilion).** Founded Pavilion (Revenue Collective); hosts CRO
  School and publishes revenue-leader comp norms. Emphasis: peer benchmarks,
  efficient growth, and multi-metric executive gates — not hero bookings.
- **Pavilion CRO Council.** Private comp data for CROs at scale; use as
  directional benchmark with Bridge Group public surveys.
- **Bridge Group.** Leadership OTE bands, quota:OTE at org level, ramp expectations.
- **Jason Lemkin.** VP Sales before $2M ARR: ~70% failure; comp must include
  system-building milestones, not only ARR.
- **Mark Roberge.** Tie executive variable to measurable machine outcomes:
  hiring, training, process adoption — not vanity pipeline.
- **Frank Slootman (Snowflake).** Sales exec comp aligned to **consumption**
  when revenue is usage-based — entire exec team on same metric set; eliminate
  siloed MBOs that block cross-functional alignment. See `gtm-leadership/references/cro-enterprise-strategy.md`.
- **John McMahon.** CRO bonus should reflect **forecast certification quality**
  and rep productivity curves — not lone-wolf hero quarters. Board expects
  predictable commits backed by MEDDICC.

## Step-by-Step Process

### Phase 1: Role Band & Mix

| Role | ARR Stage | OTE Band | Base / Variable |
|---|---|---|---|
| VP Sales | $3–15M | $220–350K | 60/40 or 50/50 |
| CRO (growth) | $15–50M | $400–600K | 65/35 |
| CRO (scale) | $50M+ | $500–800K+ | 60/40 |
| VP RevOps | $10M+ | $180–280K | 70/30 (mostly salary) |

Load `references/executive-comp-benchmarks.md` for Pavilion/Bridge alignment.

### Phase 2: Variable Gates (CRO / VP)

**Pavilion-quality gate model:**

| Metric | Weight | Minimum floor | Rationale |
|---|---:|---:|---|
| Net new ARR vs plan | 40–50% | 80% of target | Growth |
| Net revenue retention | 25–30% | 105–110% | Quality |
| Efficiency (Rule of 40 or EBITDA) | 20–25% | Board-defined floor | No junk revenue |
| Team milestones (VP) | 10–20% | Hiring/ramp KPIs | System, not heroics |

**Partial payout:** Document matrix — e.g. 80% ARR + 110% NRR = 85% variable max.

### Phase 3: Clause Library

Load `references/executive-clause-library.md` — full clause set:

- At-will employment and **cause** definition
- Variable calculation, timing, and **clawback** (90-day logo churn)
- **Equity:** grant size, vest, cliff, refresh schedule
- **Change of control:** single vs double-trigger acceleration
- **Severance:** without cause (3–6 mo base + pro-rata bonus)
- **Non-solicit** / **non-compete** (jurisdiction-specific)
- **Recoupment** and **D&O** indemnity
- **280G** parachute gross-up policy (if applicable)
- **Signing bonus** and **relocation**
- **Garden leave** and cooperation post-termination
- **Board reporting** and forecast certification
- **Commission plan** incorporation by reference

Template package: `templates/executive-offer-package.md`

### Phase 4: Equity

| Element | VP Sales | CRO |
|---|---|---|
| Initial grant | 0.25–1.0% FD | 0.5–2.0% FD |
| Vest | 4yr, 1yr cliff | 4yr, 1yr cliff |
| Refresh | Year 2–3 performance | Annual top-up band |
| Exercise window | 90 days post-termination (negotiate) | Same |

Coordinate with `equity-management` and 409A.

### Phase 5: Board Approval Packet

Deliverables for board or comp committee:

1. OTE and gate summary
2. Scenario payout table (50% / 80% / 100% / 120% plan)
3. Equity grant summary cap table impact
4. Severance and change-of-control exposure
5. Comparison to Bridge / Pavilion band (directional)
6. Recruiting context (internal vs external, urgency)

### Phase 6: Negotiation Patterns

| Candidate ask | Response framework |
|---|---|
| Higher base | Trade variable weight or milestone gates |
| Uncapped variable | Cap accelerators; add NRR gate |
| Larger equity | Refresh commitment vs upfront grant |
| Guaranteed first-year payout | Signing bonus separate from variable |
| Shorter cliff | Higher grant or lower base |

## Output Format

- **Executive offer package** (`templates/executive-offer-package.md`)
- **Clause appendix** with marked optional/required clauses
- **Board comp memo** (1–2 pages)
- **Variable payout scenario table**

## Quality Check

- [ ] Variable gated on ≥2 metrics including revenue quality (NRR or efficiency)
- [ ] Cause and severance definitions explicit
- [ ] Clawback on churn/downgrade documented
- [ ] Equity vest, cliff, refresh stated
- [ ] Change-of-control triggers defined
- [ ] Legal review flag on non-compete and commission law
- [ ] VP milestone gates if pre-$5M ARR (Lemkin system-building)

## Common Pitfalls

1. **Bookings-only CRO bonus.** Pays for bad-fit ARR. Fix: NRR + efficiency gates.
2. **No clawback.** Logo churn 60 days post-close. Fix: 90-day ARR clawback.
3. **Hero VP comp.** Single ARR number, no hiring/ramp gates. Fix: 20% system KPIs.
4. **Verbal equity.** Fix: written grant with board approval date.
5. **National non-compete template.** Unenforceable in many states. Fix: counsel.

## Consumption-Model CRO Gates (Snowflake pattern)

When revenue recognizes on **usage** (Snowflake, Databricks DBU, similar):

| Metric | Weight | Notes |
|---|---:|---|
| Consumption / usage vs plan | 30–40% | Primary revenue lever |
| Net new ARR + NRR | 25–35% | Expansion quality |
| Deployment / activation rate | 15–20% | Prevents oversell |
| S&M efficiency / Rule of 40 | 15–20% | Slootman + Meritech board lens |

Do not pay CRO on bookings alone when GAAP revenue trails contracts.

## Execution Artifacts

- `references/framework-notes.md`
- `templates/output-template.md`
- `scripts/check-output.py`
- `references/gtm-compensation-strategy.md` — **canonical master playbook** (Pattern 35)
- `references/comp-by-role-stage.md` — role × ARR stage matrix
- `templates/comp-plan-design-worksheet.md` — plan design worksheet
- `templates/ote-calculator-template.md` — OTE, quota, accelerator scenarios
- `../gtm-leadership/references/cro-enterprise-strategy.md` — Consumption comp alignment, McMahon board gates (Pattern 31)
- `references/executive-clause-library.md` — full clause text blocks
- `references/executive-comp-benchmarks.md` — Pavilion/Bridge bands
- `references/pavilion-cro-comp.md` — Sam Jacobs / CRO Council patterns
- `templates/executive-offer-package.md` — offer + comp + equity summary
- `templates/board-comp-memo.md` — board approval format
**Cross-skill:** CRO variable gates align with `saas-outcomes/references/exit-metrics-matrix.md` (NRR, Rule of 40, burn multiple)

## Related Skills

- `gtm-role-descriptions` — IC comp bands + plan templates
- `founder-comp-playbook` — founder budget, negotiation, offer walkthrough
- `sales-team-building` — hire sequence, POD economics, comp models
- `revenue-team-onboarding` — ramp tables aligned to comp plans
- `gtm-leadership` — comp approval conversations
- `equity-management` — cap table, 409A
- `employment-compliance` — offer legality
- `board-meeting-prep` — comp committee presentation
- `financial-modeling` — scenario modeling for gates