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Help with calculating company performance incentive would be much appreciated...

  • 18-08-2009 9:15am
    #1
    DaMooseDog
    Closed Accounts Posts: 37 ✭


    Hi,

    I have recently been offered a new role in a company where I will be managing a new business unit built around the development of a new engineering component that will be used in a wide range of mechanical products - the product is still at a very early product development stage so revenues are unlikely over the next 12 months.

    I'm currently earning a salary of €55K p.a, and have been asked to come up with a renumeration plan that reflects this new role, which will be largely performance-based.

    So far I can think of three possible components that may form part of the package - a base salary increase, equity entitlements and performance-related incentives based on achieving certain milestones. While I am ok with suggestions on the first two parts I am not sure how to approach the third part. The key milestones suggested thus far are:

    1.Acquire 5 test customers over the next 6 months who will test our product in their own products
    2. Acquire 5-10 paying customers who will develop the product in commercial prototypes or in market-ready products - this process is scheduled to begin in earnest approximately 8 months from now, but will not reach a break-even/profit stage until some time thereafter (at least 12-18 months from now)

    I would also like to factor in a commission-based bonus system based on achievement of certain revenues/sales targets, plus also factoring in profit. This is the part I am having particular difficulty with.

    Forgive the length of this mail but any advice/assistance would be much appreciated.


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