The plan says uncapped. Read the footnotes.
Plenty of plans say uncapped on page one. Read the rest of the document before you count on it.
A plan can be uncapped and still limit your upside. Look for:
- A decelerator, where your rate drops past a certain point
- A windfall clause, where deals over a certain size get reviewed or paid differently
- A cap on any single deal, even with no cap on the year
- Management discretion to adjust payouts
- Crediting rules that shrink a big deal before the rate applies
None of these are unusual, and some are reasonable. The point is to know they're there before you plan on a big year.
What to ask
"Is there anything in the plan, or in a separate policy, that can reduce the payout on a large deal? Has it been used in the last two years?" Get the answer in writing. Comp Plan Check covers the rest of what to look for.
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Comp Plan Check finds the red flags in a comp plan: crediting, payout timing, upside, clawbacks and mid-year changes.
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