Mid-Period Change Policy
Establish guidelines for handling changes to compensation plans, quotas, and participant circumstances that occur during an active performance period to ensure fairness to affected participants, business flexibility when needed, clear approval requirements, proper calculation and pro-ration, and minimization of mid-period changes.
1Purpose & Objectives
Establish guidelines for handling changes to compensation plans, quotas, and participant circumstances that occur during an active performance period to ensure fairness to affected participants, business flexibility when needed, clear approval requirements, proper calculation and pro-ration, and minimization of mid-period changes.
- •Fairness to affected participants
- •Business flexibility when needed
- •Clear approval requirements
- •Proper calculation and pro-ration
- •Minimization of mid-period changes (encourage planning)
2Scope
Applies To
- •Plan design changes (measures, formulas, caps, thresholds)
- •Quota changes (increases or decreases)
- •Participant status changes (promotions, demotions, transfers, leaves)
- •Territory changes
- •Organizational changes (mergers, acquisitions, restructuring)
3Definitions
Stability Principle
Compensation plans should be stable and predictable. Plans designed and approved before period begins; mid-period changes minimized; changes made only when necessary for business reasons.
No Retroactive Changes (General Rule)
Do not change the rules after performance has occurred. Changes apply prospectively (from change date forward). Exception: Correcting company errors (may apply retroactively).
Participant Protection
Changes should not unfairly penalize participants. If change reduces earnings potential, consider grandfathering or phase-in. If change due to company action (reorg, etc.), participant should be made whole.
Blended Annual Quota
Pro-rated quota calculation: (Old Quota x % of Year in Old Quota) + (New Quota x % of Year in New Quota).
4Key Provisions
Changes to plan structure, measures, formulas, caps, thresholds, or other plan terms. STRONGLY DISCOURAGED.
When Permitted
Plan design changes are only permitted in limited circumstances. Approval Required: CRB (always).
- •Legal/regulatory requirement (must change to comply with law)
- •Significant business change (acquisition, product line discontinuation, etc.)
- •Plan error that is unsustainable (e.g., calculation error causing massive overpayment)
Participant Impact Mitigation
If change reduces earnings potential, consider mitigation options:
- •Grandfathering current participants (apply change to new hires only)
- •Phase-in over multiple periods
- •One-time transition payment to offset impact
5Compliance References
State Laws
- •California: Limitations on retroactive changes to commission plans
- •State wage laws may restrict mid-period changes to commission plans
- •State-specific requirements vary