---
title: Incentive Compensation Glossary | Key Terms & Definitions
description: Understand key incentive compensation terms, including commissions, bonuses, SPIFs, OTE, KPI incentives, variable pay, quotas, payouts, and governance.
image: https://www.bentega.io/hubfs/Incentive%20Compensation%20Software%20%20Bentega.io-2.png
---

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 Glossary

# Incentive compensation glossary

Use this glossary to understand the key terms used in incentive compensation, sales compensation, bonuses, SPIFs, OTE, KPI incentives, performance pay, variable pay, and payout governance.

It is designed as a quick reference for Finance, Sales, RevOps, HR, Customer Success, GTM leaders, managers, and plan owners who need clear definitions and practical context.

[Read the incentive compensation guide](https://www.bentega.io/incentive-compensation) [Read the ICM guide](https://www.bentega.io/incentive-compensation-management)

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Short answer

## What is incentive compensation?

Incentive compensation is performance-linked pay used to reward specific outcomes, behaviors, or business results. It can include commissions, bonuses, SPIFs, OTE-based payouts, KPI incentives, Customer Success incentives, performance pay, and broader variable pay.

Incentive compensation management is the workflow for managing plan rules, source data, calculations, exceptions, approvals, payout visibility, statements, audit trail, and finance-ready outputs.

[Read the incentive compensation guide →](https://www.bentega.io/incentive-compensation)

Browse glossary terms

Show sections

- [Core incentive compensation terms](https://www.bentega.io/glossary#core-terms)
- [Sales compensation terms](https://www.bentega.io/glossary#sales-compensation-terms)
- [Plan type terms](https://www.bentega.io/glossary#plan-type-terms)
- [Measurement terms](https://www.bentega.io/glossary#measurement-terms)
- [Definition](https://www.bentega.io/glossary#Definition)
- [Governance and payout workflow terms](https://www.bentega.io/glossary#workflow-terms)
- [How the terms connect](https://www.bentega.io/glossary#how-terms-connect)
- [Related resources](https://www.bentega.io/glossary#related-resources)
- [FAQ](https://www.bentega.io/glossary#faq)

 Core terms

## Core incentive compensation terms

Start here for the foundational language used across incentive compensation plans, variable pay programs, and payout workflows.

### Base salary

Short definition:

 Base salary is fixed compensation paid to an employee before variable pay, bonuses, commissions, or other incentives are added.

Practical explanation:

 In OTE-based plans, base salary is the guaranteed part of target earnings. The variable portion depends on plan rules, performance, and payout logic.

Related terms:

[OTE](https://www.bentega.io/glossary#OTE), [target variable pay](https://www.bentega.io/glossary#target-variable-pay), [pay mix](https://www.bentega.io/glossary#pay-mix), [variable pay](https://www.bentega.io/glossary#variable-pay)

Recommended next step:

[Read the OTE guide →](https://www.bentega.io/on-target-earnings)

### Compensation plan

Short definition:

A compensation plan documents how employees are paid, including fixed pay, variable pay, eligibility, metrics, payout logic, and timing.

Practical explanation:

 A strong plan should define who is eligible, what counts, how payout is calculated, when payout happens, and who approves exceptions.

Related terms:

[Plan rules](https://www.bentega.io/glossary#plan-rules), [eligibility](https://www.bentega.io/glossary#eligibility), [payout formula](https://www.bentega.io/glossary#payout-formula), [payout timing](https://www.bentega.io/glossary#payout-timing)

Recommended next step:

[Download the compensation plan template →](https://www.bentega.io/sample-sales-compensation-plans-free-guides-templates)

### Eligibility

Short definition:

Eligibility defines who qualifies for an incentive plan, payout, bonus, commission, or variable pay program.

Practical explanation:

 Eligibility rules should explain which roles, employees, teams, regions, plans, products, or performance periods are included before calculations begin.

Related terms:

[Plan rules](https://www.bentega.io/glossary#plan-rules), [compensation plan](https://www.bentega.io/glossary#compensation-plan), [payout formula](https://www.bentega.io/glossary#payout-formula), [approval workflow](https://www.bentega.io/glossary#approval-workflow)

Recommended next step:

[Download the compensation plan template →](https://www.bentega.io/sample-sales-compensation-plans-free-guides-templates)

### Incentive compensation

Short definition:

Incentive compensation is performance-linked pay used to reward specific outcomes, behaviors, or business results.

Practical explanation:

It can include commissions, bonuses, SPIFs, OTE-based payouts, KPI incentives, Customer Success incentives, performance pay, and broader variable pay.

Related terms:

[Variable pay](https://www.bentega.io/glossary#variable-pay), [commission](https://www.bentega.io/glossary#commission), [bonus](https://www.bentega.io/glossary#bonus), [performance pay](https://www.bentega.io/glossary#performance-pay), [KPI incentive](https://www.bentega.io/glossary#kpi-incentive)

Recommended next step:

[Read the incentive compensation guide →](https://www.bentega.io/incentive-compensation)

### Incentive compensation management

Short definition:

 Incentive compensation management is the process of managing incentive plans, calculations, approvals, visibility, and payout outputs.

Practical explanation:

It covers the workflow from plan rules and source data to calculations, exceptions, approvals, statements, audit trail, and finance-ready outputs.

Related terms:

[Plan rules](https://www.bentega.io/glossary#plan-rules), [payout approval](https://www.bentega.io/glossary#payout-approval), [payout statement](https://www.bentega.io/glossary#payout-statement), [audit trail](https://www.bentega.io/glossary#audit-trail), [finance-ready outputs](https://www.bentega.io/glossary#finance-ready-outputs)

Recommended next step:

[Read the ICM guide →](https://www.bentega.io/incentive-compensation-management)

### Plan rules

Short definition:

 Plan rules define how an incentive or compensation plan works.

Practical explanation:

Rules may include eligibility, targets, rates, weights, thresholds, gates, caps, accelerators, payout timing, exceptions, and approval owners.

Related terms:

[Eligibility](https://www.bentega.io/glossary#eligibility), [payout formula](https://www.bentega.io/glossary#payout-formula), [approval workflow](https://www.bentega.io/glossary#approval-workflow), [exceptions](https://www.bentega.io/glossary#exceptions)

Recommended next step:

[Download the compensation plan template →](https://www.bentega.io/sample-sales-compensation-plans-free-guides-templates)

### Variable pay

Short definition:

 Variable pay is compensation that changes based on performance, outcomes, targets, or plan rules.

Practical explanation:

It can include bonuses, commissions, SPIFs, KPI incentives, performance pay, and other non-fixed compensation.

Related terms:

[Incentive compensation](https://www.bentega.io/glossary#incentive-compensation), [bonus](https://www.bentega.io/glossary#bonus), [commission](https://www.bentega.io/glossary#commission), [performance pay](https://www.bentega.io/glossary#performance-pay)

Recommended next step:

[Read the incentive compensation guide →](https://www.bentega.io/incentive-compensation)

 Sales compensation

## Sales compensation terms

These terms explain how sales compensation connects quota, crediting, commission logic, payout timing, and earning visibility.

### Commission

Short definition:

 Commission is variable pay earned from sales-related performance, such as revenue, bookings, margin, or quota attainment.

Practical explanation:

Commission is often used as the payout mechanism in sales compensation plans. It should be supported by clear crediting rules, rates, eligible revenue definitions, payout timing, and approval logic.

Related terms:

[Sales commission](https://www.bentega.io/glossary#sales-commission), [commission rate](https://www.bentega.io/glossary#commission-rate), [commission structure](https://www.bentega.io/glossary#commission-structure), [commission payout](https://www.bentega.io/glossary#commission-payout)

Recommended next step:

[Read the sales commission guide →](https://www.bentega.io/sales-commission)

### Commission payout

Short definition:

 Commission payout is the amount of commission earned under a commission plan.

Practical explanation:

Commission payout is usually calculated from credited performance, commission rates, quota attainment, accelerators, caps, and other plan rules.

Related terms:

[Commission](https://www.bentega.io/glossary#commission), [commission rate](https://www.bentega.io/glossary#commission-rate), [quota](https://www.bentega.io/glossary#quota), [attainment](https://www.bentega.io/glossary#attainment), [payout formula](https://www.bentega.io/glossary#payout-formula)

Recommended next step:

[Use the OTE calculator →](https://www.bentega.io/tools/ote-calculator)

### Commission rate

Short definition:

A commission rate is the percentage or amount used to calculate commission payout.

Practical explanation:

 For example, a 5% commission rate on €100,000 of eligible revenue creates a €5,000 commission payout before other plan rules apply.

Related terms:

[Commission structure](https://www.bentega.io/glossary#commission-structure), [quota](https://www.bentega.io/glossary#quota), [attainment](https://www.bentega.io/glossary#attainment), [accelerator](https://www.bentega.io/glossary#accelerator)

Recommended next step:

[Use the OTE calculator →](https://www.bentega.io/tools/ote-calculator)

### Commission structure

Short definition:

 A commission structure defines how sales commission is calculated.

Practical explanation:

 Examples include flat-rate commission, tiered commission, quota-based commission, accelerated commission, capped commission, and split commission.

Related terms:

[Commission rate](https://www.bentega.io/glossary#commission-rate), [accelerator](https://www.bentega.io/glossary#accelerator), [cap](https://www.bentega.io/glossary#cap), [split crediting](https://www.bentega.io/glossary#split-crediting)

Recommended next step:

[Compare sales commission structures →](https://www.bentega.io/sales-commission-structure)

### Crediting rules

Short definition:

 Crediting rules define who receives performance credit for a deal, account, renewal, expansion, or target.

Practical explanation:

 Crediting rules help prevent disputes by clarifying ownership before payout calculations begin.

Related terms:

[Split crediting](https://www.bentega.io/glossary#split-crediting), [quota](https://www.bentega.io/glossary#quota), [attainment](https://www.bentega.io/glossary#attainment), [payout approval](https://www.bentega.io/glossary#payout-approval)

Recommended next step:

[Download the compensation plan template →](https://www.bentega.io/sample-sales-compensation-plans-free-guides-templates)

### Sales commission

Short definition:

 Sales commission is variable pay tied to sales results such as revenue, bookings, margin, or quota attainment.

Practical explanation:

A commission plan should define eligible revenue, crediting, rates, payout timing, accelerators, caps, and approval rules.

Related terms:

[Commission rate](https://www.bentega.io/glossary#commission-rate), [commission structure](https://www.bentega.io/glossary#commission-structure), [quota](https://www.bentega.io/glossary#quota), [attainment](https://www.bentega.io/glossary#attainment), [accelerator](https://www.bentega.io/glossary#accelerator)

Recommended next step:

[Read the sales commission guide →](https://www.bentega.io/sales-commission)

### Sales compensation

Short definition:

 Sales compensation is the pay structure used to reward sales roles for performance.

Practical explanation:

 It often includes base salary, commission, OTE, quota, accelerators, SPIFs, bonuses, and payout rules.

Related terms:

[Sales commission](https://www.bentega.io/glossary#sales-commission), [OTE](https://www.bentega.io/glossary#OTE), [quota](https://www.bentega.io/glossary#quota), [attainment](https://www.bentega.io/glossary#attainment), [commission structure](https://www.bentega.io/glossary#commission-structure)

Recommended next step:

[Read the sales compensation guide →](https://www.bentega.io/sales-compensation)

### Split crediting

Short definition:

Split crediting defines how sales credit or payout is shared between multiple people or teams.

Practical explanation:

 It is important when multiple contributors support the same deal, renewal, expansion, or customer outcome.

Related terms:

[Crediting rules](https://www.bentega.io/glossary#crediting-rules), [payout formula](https://www.bentega.io/glossary#payout-formula), [exceptions](https://www.bentega.io/glossary#exceptions), [approval workflow](https://www.bentega.io/glossary#approval-workflow)

Recommended next step:

[Read the sales commission guide →](https://www.bentega.io/sales-commission)

 Plan types

## Bonus, SPIF, OTE, and performance pay terms

 These terms describe common incentive plan types and payout models used across Sales, Customer Success, Finance, HR, and GTM teams.

### Bonus

Short definition:

 A bonus is a one-time or periodic payout tied to individual, team, company, or KPI-based performance.

Practical explanation:

 Bonus plans can reward strategic goals, company performance, team outcomes, or specific measurable results.

Related terms:

[Variable pay](https://www.bentega.io/glossary#variable%20pay), [KPI incentive](https://www.bentega.io/glossary#kpi-incentive), [performance pay](https://www.bentega.io/glossary#performance-pay), [company bonus](https://www.bentega.io/glossary#company-bonus)

Recommended next step:

[Read the bonus guide →](https://www.bentega.io/bonus)

### Bonus formula

Short definition:

 A bonus formula defines how bonus payout is calculated.

Practical explanation:

A bonus formula may use individual performance, company performance, team results, KPI achievement, weighting, gates, thresholds, or approval rules to determine payout.

Related terms:

[Bonus](https://www.bentega.io/glossary#bonus), [KPI incentive](https://www.bentega.io/glossary#kpi-incentive), [payout formula](https://www.bentega.io/glossary#payout-formula), [KPI weighting](https://www.bentega.io/glossary#kpi-weighting)

Recommended next step:

[Read the bonus guide →](https://www.bentega.io/bonus)

### Company bonus

Short definition:

 A company bonus is a bonus tied to company-level performance or business results.

Practical explanation:

 Company bonus plans can reward outcomes such as revenue growth, profitability, EBITDA, strategic milestones, or broader company performance. The plan should define how company results affect individual payout.

Related terms:

[Bonus](https://www.bentega.io/glossary#bonus), [KPI incentive](https://www.bentega.io/glossary#kpi-incentive), [performance pay](https://www.bentega.io/glossary#performance-pay), [variable pay](https://www.bentega.io/glossary#variable-pay)

Recommended next step:

[Read the bonus guide →](https://www.bentega.io/bonus)

### Customer Success incentives

Short definition:

Customer Success incentives are performance-linked rewards tied to customer outcomes.

Practical explanation:

They may support renewals, expansion, NRR, onboarding, adoption, customer health, retention, or other Customer Success goals.

Related terms:

 Renewal incentive, expansion incentive, KPI incentive, [performance pay](https://www.bentega.io/glossary#performance-pay)

Recommended next step:

[Explore Customer Success incentives →](https://www.bentega.io/use-cases/customer-success-incentives)

### Expansion incentive

Short definition:

An expansion incentive is variable pay tied to growing revenue from existing customers.

Practical explanation:

Expansion incentives may reward upsell, cross-sell, seat growth, product adoption, account growth, or net revenue retention. Clear crediting rules are important when multiple teams contribute.

Related terms:

[Customer Success incentives](https://www.bentega.io/glossary#customer-success-incentives), [renewal incentive](https://www.bentega.io/glossary#renewal-incentive), [sales commission](https://www.bentega.io/glossary#sales-commission), [split crediting](https://www.bentega.io/glossary#split-crediting)

Recommended next step:

[Explore Customer Success incentives →](https://www.bentega.io/use-cases/customer-success-incentives)

### On-target earnings

Short definition:

On-target earnings is the full term for OTE.

Practical explanation:

 It represents expected total earnings at target performance, not guaranteed salary.

Related terms:

[OTE](https://www.bentega.io/glossary#OTE), [pay mix](https://www.bentega.io/glossary#pay-mix), [variable pay](https://www.bentega.io/glossary#variable-pay), [quota](https://www.bentega.io/glossary#quota)

Recommended next step:

[Use the OTE calculator →](https://www.bentega.io/tools/ote-calculator)

### OTE

Short definition:

OTE stands for on-target earnings, or the expected total earnings when target performance is achieved.

Practical explanation:

 OTE usually combines base salary and target variable pay. It is common in sales compensation and other target-based compensation plans.

Related terms:

[Base salary](https://www.bentega.io/glossary#base-salary), [target variable pay](https://www.bentega.io/glossary#target-variable-pay), [quota](https://www.bentega.io/glossary#quota), [pay mix](https://www.bentega.io/glossary#pay-mix)

Recommended next step:

[Read the OTE guide →](https://www.bentega.io/on-target-earnings)

### Pay for performance

Short definition:

Pay for performance is compensation linked to measurable performance, contribution, or results.

Practical explanation:

Pay for performance can include bonuses, commissions, KPI incentives, performance pay, and other variable pay models where earnings depend on outcomes.

Related terms:

[Performance pay](https://www.bentega.io/glossary#performance-pay), [variable pay](https://www.bentega.io/glossary#variable-pay), [KPI incentive](https://www.bentega.io/glossary#kpi-incentive), [bonus](https://www.bentega.io/glossary#bonus)

Recommended next step:

[Read the performance pay guide →](https://www.bentega.io/performance-pay)

### Performance pay

Short definition:

Performance pay is compensation linked to measurable performance, outcomes, or contribution.

Practical explanation:

 It can apply to individuals, teams, or company-wide goals and may include bonuses, KPI incentives, commissions, or other variable pay.

Related terms:

 Pay for performance, [KPI incentive](https://www.bentega.io/glossary#kpi-incentive), [variable pay](https://www.bentega.io/glossary#variable-pay), [bonus](https://www.bentega.io/glossary#bonus)

Recommended next step:

[Read the performance pay guide →](https://www.bentega.io/performance-pay)

### Renewal incentive

Short definition:

A renewal incentive is variable pay tied to customer renewals or retention outcomes.

Practical explanation:

Renewal incentives are often used in Customer Success and account management plans. They should define eligible renewals, timing, ownership, customer health rules, and payout logic.

Related terms:

[Customer Success incentives](https://www.bentega.io/glossary#customer-success-incentive), [KPI incentive](https://www.bentega.io/glossary#kpi-incentive), [performance pay](https://www.bentega.io/glossary#performance-pay), [expansion incentive](https://www.bentega.io/glossary#expansion-incentive)

Recommended next step:

[Explore Customer Success incentives →](https://www.bentega.io/use-cases/customer-success-incentives)

### Short-term incentive

Short definition:

A short-term incentive is a time-limited reward designed to motivate a specific action, outcome, or business priority.

Practical explanation:

SPIFs are a common type of short-term incentive. They are often used for campaign-based goals, product pushes, renewal focus, expansion activity, or quarter-end priorities.

Related terms:

[SPIF](https://www.bentega.io/glossary#spif), [bonus](https://www.bentega.io/glossary#bonus), [commission](https://www.bentega.io/glossary#commission), [performance pay](https://www.bentega.io/glossary#performance-pay)

Recommended next step:

[Read the SPIF guide →](https://www.bentega.io/spif)

### SPIF

Short definition:

A SPIF is a short-term incentive campaign used to reward a specific action, outcome, or business priority.

Practical explanation:

 SPIFs are often used for product launches, quarter-end focus, expansion campaigns, renewals, margin priorities, or short-term GTM initiatives.

Related terms:

[SPIFF](https://www.bentega.io/blog/spif-vs.-spiff-which-sales-term-is-correct-and-whats-the-difference), [bonus](https://www.bentega.io/glossary#bonus), [commission](https://www.bentega.io/glossary#commission), [short-term incentive](https://www.bentega.io/glossary#short-term-incentive)

Recommended next step:

[Read the SPIF guide →](https://www.bentega.io/spif)

### SPIFF

Short definition:

 SPIFF is an alternative spelling of SPIF.

Practical explanation:

 Both SPIF and SPIFF are commonly used for short-term incentive campaigns. Bentega uses SPIF as the primary spelling.

Related terms:

[SPIF](https://www.bentega.io/glossary#spif), [short-term incentive](https://www.bentega.io/glossary#short-term-incentive), [bonus](https://www.bentega.io/glossary#bonus)

Recommended next step:

[Read the SPIF guide →](https://www.bentega.io/spif)

 Measurement

## KPI, quota, and measurement terms

 These terms explain how performance is measured, compared to targets, and converted into incentive payouts.

### Accelerator

Short definition:

 An accelerator increases payout when performance exceeds a defined threshold.

Practical explanation:

 Accelerators are often used in sales compensation to reward overperformance above quota.

Related terms:

[Commission structure](https://www.bentega.io/glossary#commission-structure), [quota](https://www.bentega.io/glossary#quota), [attainment](https://www.bentega.io/glossary#attainment), [cap](https://www.bentega.io/glossary#gap)

Recommended next step:

[Compare sales commission structures →](https://www.bentega.io/sales-commission-structure)

### Attainment

Short definition:

 Attainment measures performance against a target or quota.

Practical explanation:

 For example, if quota is €1,000,000 and credited performance is €800,000, attainment is 80%.

Related terms:

[Quota](https://www.bentega.io/glossary#quota), [target](https://www.bentega.io/glossary#target), [commission payout](https://www.bentega.io/glossary#commission-payout), [OTE](https://www.bentega.io/glossary#OTE)

Recommended next step:

[Use the OTE calculator →](https://www.bentega.io/tools/ote-calculator)

### Cap

Short definition:

A cap is a maximum payout limit.

Practical explanation:

 Caps can help control cost exposure, but they should be communicated clearly so employees understand where upside ends.

Related terms:

[Accelerator](https://www.bentega.io/glossary#accelerator), [payout formula](https://www.bentega.io/glossary#payout-formula), [threshold](https://www.bentega.io/glossary#threshold), [commission structure](https://www.bentega.io/glossary#commission-structure)

Recommended next step:

[Use the OTE calculator →](https://www.bentega.io/tools/ote-calculator)

### Gate

Short definition:

 A gate is a condition that must be met before payout is allowed or adjusted.

Practical explanation:

A plan may require margin, customer quality, approval status, or minimum performance before an incentive payout applies.

Related terms:

[Threshold](https://www.bentega.io/glossary#threshold), [cap](https://www.bentega.io/glossary#cap), [payout formula](https://www.bentega.io/glossary#payout-formula), [eligibility](https://www.bentega.io/glossary#eligibility)

Recommended next step:

[Read the performance pay guide →](https://www.bentega.io/performance-pay)

### KPI

Short definition:

 A KPI, or key performance indicator, is a measurable indicator used to track performance against a goal.

Practical explanation:

 In incentive compensation, KPIs can determine eligibility, payout amount, gates, or bonus achievement.

Related terms:

[KPI incentive](https://www.bentega.io/glossary#kpi-incentive), [metric](https://www.bentega.io/glossary#metric), [target](https://www.bentega.io/glossary#target), [performance pay](https://www.bentega.io/glossary#performance-pay)

Recommended next step:

[Read the KPI guide →](https://www.bentega.io/kpis-and-metrics)

### KPI incentive

Short definition:

 A KPI incentive is variable pay tied to achievement of one or more KPIs.

Practical explanation:

 KPI incentives can reward outcomes such as retention, margin, customer health, forecast accuracy, productivity, quality, or strategic milestones.

Related terms:

[KPI](https://www.bentega.io/glossary#kpi), [performance pay](https://www.bentega.io/glossary#performance-pay), [bonus](https://www.bentega.io/glossary#bonus), [variable pay](https://www.bentega.io/glossary#variable-pay)

Recommended next step:

[Read the KPI guide →](https://www.bentega.io/kpis-and-metrics)

### KPI weighting

Short definition:

KPI weighting defines how much each KPI contributes to the total incentive payout.

Practical explanation:

For example, a bonus plan may weight revenue at 50%, retention at 30%, and customer health at 20%. Weighting helps plan owners balance priorities and avoid over-rewarding one metric.

Related terms:

[KPI](https://www.bentega.io/glossary#kpi), [KPI incentive](https://www.bentega.io/glossary#kpi-incentive), [bonus formula](https://www.bentega.io/glossary#bonus-formula), [payout formula](https://www.bentega.io/glossary#payout-formula)

Recommended next step:

[Read the KPI guide →](https://www.bentega.io/kpis-and-metrics)

### Metric

Short definition:

A metric is a measurable data point used to track performance, activity, outcome, or progress.

Practical explanation:

 In incentive compensation, metrics should be clear, measurable, trusted, and connected to outcomes the participant can reasonably influence.

Related terms:

[KPI](https://www.bentega.io/glossary#kpi), [KPI incentive](https://www.bentega.io/glossary#kpi-incentive), [target](https://www.bentega.io/glossary#target), [performance pay](https://www.bentega.io/glossary#performance-pay)

Recommended next step:

[Read the KPI guide →](https://www.bentega.io/kpis-and-metrics)

### Pay mix

Short definition:

 Pay mix is the split between fixed pay and variable pay.

Practical explanation:

For example, a 70/30 pay mix means 70% of target earnings are fixed and 30% are variable.

Related terms:

[Base salary](https://www.bentega.io/glossary#base-salary), [target variable pay](https://www.bentega.io/glossary#target-variable-pay), [OTE](https://www.bentega.io/glossary#OTE)

Recommended next step:

[Use the OTE calculator →](https://www.bentega.io/tools/ote-calculator)

### Quota

Short definition:

 Quota is a performance target that an employee or team is expected to achieve in a defined period.

Practical explanation:

 Quota is often used in sales compensation, but target-based logic can also apply to Customer Success, GTM, or performance-based plans.

Related terms:

[Attainment](https://www.bentega.io/glossary#attainment), [OTE](https://www.bentega.io/glossary#OTE), [commission](https://www.bentega.io/glossary#commission), [target](https://www.bentega.io/glossary#target)

Recommended next step:

[Read the OTE guide →](https://www.bentega.io/on-target-earnings)

### Target

Short definition:

 A target is a defined performance goal used to measure achievement and calculate payout.

Practical explanation:

Targets can be based on revenue, bookings, margin, renewals, expansion, customer health, productivity, quality, or other measurable outcomes.

Related terms:

[Quota](https://www.bentega.io/glossary#quota), [KPI](https://www.bentega.io/glossary#kpi), [attainment](https://www.bentega.io/glossary#attainment), [payout formula](https://www.bentega.io/glossary#payout-formula)

Recommended next step:

[Read the KPI guide →](https://www.bentega.io/kpis-and-metrics)

### Target variable pay

Short definition:

 Target variable pay is the amount of variable compensation available when target performance is achieved.

Practical explanation:

 It is often part of OTE and may be earned through commissions, bonuses, KPI incentives, or other performance-linked plan rules.

Related terms:

[OTE](https://www.bentega.io/glossary#OTE), [base salary](https://www.bentega.io/glossary#base-salary), [pay mix](https://www.bentega.io/glossary#pay-mix), [quota](https://www.bentega.io/glossary#quota)

Recommended next step:

[Read the OTE guide →](https://www.bentega.io/on-target-earnings)

### Threshold

Short definition:

 A threshold is a minimum level of performance required before payout begins or changes.

Practical explanation:

 Thresholds can protect the business from paying incentives before a minimum level of performance, quality, margin, or eligibility is reached.

Related terms:

[Gate](https://www.bentega.io/glossary#gate), [accelerator](https://www.bentega.io/glossary#accelerator), [cap](https://www.bentega.io/glossary#cap), [payout formula](https://www.bentega.io/glossary#payout-formula)

Recommended next step:

[Download the compensation plan template →](https://www.bentega.io/sample-sales-compensation-plans-free-guides-templates)

 Workflow terms

## Governance and payout workflow terms

These terms explain the operating workflow behind incentive compensation: rules, data, calculations, exceptions, approvals, statements, audit trail, and finance-ready outputs.

### Approval workflow

Short definition:

An approval workflow defines who reviews and approves payouts, exceptions, or adjustments.

Practical explanation:

 A clear approval workflow reduces uncertainty and helps teams understand what has been reviewed, changed, and approved.

Related terms:

[Payout approval](https://www.bentega.io/glossary#payout-approval), [exception handling](https://www.bentega.io/glossary#exception-handling), [audit trail](https://www.bentega.io/glossary#audit-trail)

Recommended next step:

[Check your ICM score →](https://www.bentega.io/icm-readiness-checklist-bentega)

### Audit trail

Short definition:

An audit trail is a record of changes, approvals, calculations, adjustments, and payout outputs.

Practical explanation:

 Audit trail matters when teams need to explain how a payout was calculated, changed, approved, or exported.

Related terms:

[Approval workflow](https://www.bentega.io/glossary#approval-workflow), [exception handling](https://www.bentega.io/glossary#exception-handling), [finance-ready outputs](https://www.bentega.io/glossary#finance-ready-outputs)

Recommended next step:

[Check your ICM score →](https://www.bentega.io/icm-readiness-checklist-bentega)

### Calculations

Short definition:

Calculations are the process of converting plan rules, source data, performance results, and payout formulas into incentive compensation amounts.

Practical explanation:

 Incentive compensation calculations may include commissions, bonuses, SPIFs, OTE-based payouts, KPI incentives, thresholds, caps, accelerators, exceptions, and manual adjustments.

Related terms:

[Payout formula](https://www.bentega.io/glossary#payout-formula), [plan rules](https://www.bentega.io/glossary#plan-rules), source data, [approval workflow](https://www.bentega.io/glossary#approval-workflow)

Recommended next step:

[Read the ICM guide →](https://www.bentega.io/incentive-compensation-management)

### Clawback

Short definition:

 A clawback is a rule that allows a company to recover or reverse incentive payout under defined conditions.

Practical explanation:

 Clawbacks may apply when revenue is cancelled, refunded, not collected, or later found to be ineligible. They should be clearly documented before the plan starts.

Related terms:

[Payout formula](https://www.bentega.io/glossary#payout-formula), [eligibility](https://www.bentega.io/glossary#eligibility), [exception handling](https://www.bentega.io/glossary#exception-handling), [approval workflow](https://www.bentega.io/glossary#approval-workflow)

Recommended next step:

[Download the compensation plan template →](https://www.bentega.io/sample-sales-compensation-plans-free-guides-templates)

### Employee communication

Short definition:

Employee communication explains incentive compensation rules, results, payouts, and timing to employees.

Practical explanation:

Good communication helps employees understand eligibility, targets, plan rules, payout calculations, adjustments, statements, and when they can expect payment.

Related terms:

[Payout statement](https://www.bentega.io/glossary#payout-statement), [payout visibility](https://www.bentega.io/glossary#payout-visibility), [compensation plan](https://www.bentega.io/glossary#compensation-plan), [plan rules](https://www.bentega.io/glossary#plan-rules)

Recommended next step:

[Read the ICM guide →](https://www.bentega.io/incentive-compensation-management)

### Exception handling

Short definition:

Exception handling is the process for reviewing special cases that do not fit standard plan rules.

Practical explanation:

 Examples include role changes, territory changes, split crediting, manual adjustments, disputes, missing data, or one-off approvals.

Related terms:

[Approval workflow](https://www.bentega.io/glossary#approval-workflow), [audit trail](https://www.bentega.io/glossary#audit-trail), [manual adjustment](https://www.bentega.io/glossary#manual-adjustment), [payout dispute](https://www.bentega.io/glossary#payout-dispute)

Recommended next step:

[Read the ICM guide →](https://www.bentega.io/incentive-compensation-management)

### Exceptions

Short definition:

Exceptions are special cases that do not follow the standard incentive compensation rules.

Practical explanation:

Common exceptions include role changes, territory changes, split crediting, missing data, manual adjustments, disputes, ramp periods, clawbacks, or one-off approvals.

Related terms:

 Exception handling, manual adjustment, approval workflow, audit trail

Recommended next step:

[Check your ICM score →](https://www.bentega.io/icm-readiness-checklist-bentega)

### Finance-ready outputs

Short definition:

Finance-ready outputs are structured payout outputs prepared for downstream finance processes.

Practical explanation:

 They can support finance review, payout handoff, accruals, reporting, and internal control after payouts are calculated and approved.

Related terms:

[Payout approval](https://www.bentega.io/glossary#payout-approval), [audit trail](https://www.bentega.io/glossary#audit-trail), [payout statement](https://www.bentega.io/glossary#payout-statement)

Recommended next step:

[Explore Finance incentive control →](https://www.bentega.io/solutions/cfos-finance-incentive-control)

### Manual adjustment

Short definition:

 A manual adjustment is a change made to a calculated payout outside the standard formula.

Practical explanation:

Manual adjustments should be documented, reviewed, and approved so the payout can be explained later.

Related terms:

[Exception handling](https://www.bentega.io/glossary#exception-handling), [approval workflow](https://www.bentega.io/glossary#approval-workflow), [audit trail](https://www.bentega.io/glossary#audit-trail)

Recommended next step:

[Check your ICM score →](https://www.bentega.io/icm-readiness-checklist-bentega)

### Payout approval

Short definition:

 Payout approval is the review and approval process before compensation is released downstream.

Practical explanation:

 Approval workflows may involve managers, Finance, HR, RevOps, leadership, or other plan owners.

Related terms:

[Approval workflow](https://www.bentega.io/glossary#approval-workflow), [finance-ready outputs](https://www.bentega.io/glossary#finance-ready-outputs), [audit trail](https://www.bentega.io/glossary#audit-trail), [payout statement](https://www.bentega.io/glossary#payout-statement)

Recommended next step:

[Read the ICM guide →](https://www.bentega.io/incentive-compensation-management)

### Payout dispute

Short definition:

A payout dispute is a disagreement about an incentive compensation calculation, eligibility decision, crediting rule, adjustment, or payout result.

Practical explanation:

Payout disputes are easier to resolve when plan rules, source data, calculations, approvals, exceptions, and audit trail are clearly documented.

Related terms:

[Exception handling](https://www.bentega.io/glossary#exception-handling), [approval workflow](https://www.bentega.io/glossary#approval-workflow), [audit trail](https://www.bentega.io/glossary#audit-trail), [payout statement](https://www.bentega.io/glossary#payout-statement)

Recommended next step:

[Check your ICM score →](https://www.bentega.io/icm-readiness-checklist-bentega)

### Payout formula

Short definition:

 A payout formula defines how performance turns into compensation.

Practical explanation:

 The formula may include rates, weights, thresholds, gates, caps, accelerators, attainment, eligibility, and other plan rules.

Related terms:

[Commission rate](https://www.bentega.io/glossary#commission-rate), [bonus formula](https://www.bentega.io/glossary#bonus-formula), [KPI weighting](https://www.bentega.io/glossary#kpi-weighting), [payout approval](https://www.bentega.io/glossary#payout-approval)

Recommended next step:

[Download the compensation plan template →](https://www.bentega.io/sample-sales-compensation-plans-free-guides-templates)

### Payout statement

Short definition:

 A payout statement explains what was earned, why it was earned, and when it will be paid.

Practical explanation:

Good payout statements help employees understand the rules, results, calculations, adjustments, and payout timing.

Related terms:

[Payout visibility](https://www.bentega.io/glossary#payout-visibility), [employee communication](https://www.bentega.io/glossary#employee-communication), [incentive compensation management](https://www.bentega.io/glossary#incentive-compensation-management)

Recommended next step:

[Read the ICM guide →](https://www.bentega.io/incentive-compensation-management)

### Payout timing

Short definition:

Payout timing defines when incentive compensation is calculated, reviewed, approved, and paid.

Practical explanation:

Clear payout timing helps employees understand when performance is measured, when payouts are reviewed, when approvals happen, and when payment moves downstream.

Related terms:

[Payout approval](https://www.bentega.io/glossary#payout-approval), [payout statement](https://www.bentega.io/glossary#payout-statement), [compensation plan](https://www.bentega.io/glossary#compensation-plan), [employee communication](https://www.bentega.io/glossary#employee-communication)

Recommended next step:

[Download the compensation plan template →](https://www.bentega.io/sample-sales-compensation-plans-free-guides-templates)

### Payout visibility

Short definition:

Payout visibility means employees, managers, and stakeholders can understand expected or final payout information.

Practical explanation:

Visibility helps reduce payout questions and makes incentive compensation easier to trust.

Related terms:

[Payout statement](https://www.bentega.io/glossary#payout-statement), [approval workflow](https://www.bentega.io/glossary#approval-workflow), [calculations](https://www.bentega.io/glossary#calculations)

Recommended next step:

[Explore the product →](https://www.bentega.io/product)

How it fits together

## How incentive compensation terms connect

Incentive compensation is the broad category. It covers performance-linked pay used to reward outcomes, behaviors, or business results.

Variable pay is the part of compensation that changes based on performance, targets, plan rules, or business results. Commissions, bonuses, SPIFs, OTE-based payouts, KPI incentives, Customer Success incentives, and performance pay are common plan types or payout models inside the broader incentive compensation category.

Measurement terms explain how performance is evaluated. Quota, attainment, KPIs, thresholds, gates, caps, and accelerators help define what counts, when payout starts, how payout changes, and where payout may stop.

Incentive compensation management is the workflow that makes the system manageable in practice: plan rules, source data, calculations, exceptions, approvals, payout statements, audit trail, visibility, and finance-ready outputs.

**Key takeaways:**

- Incentive compensation is the umbrella category for performance-linked pay.
- Plan types define what is being rewarded.
- Measurement terms define how performance becomes payout.
- Governance terms define how payouts are reviewed, approved, explained, and handed off.
- A clear workflow makes incentive compensation easier to understand, manage, and trust.

[Read the incentive compensation guide →](https://www.bentega.io/incentive-compensation) [Read the ICM guide →](https://www.bentega.io/incentive-compensation-management)

Related resources

## Go deeper on incentive compensation

 Use these resources to explore the terms in more detail and move from definitions to practical plan design, workflow improvement, and incentive compensation management.

### Start here

 Guide

[Incentive compensation](https://www.bentega.io/incentive-compensation) 

[Read the incentive compensation guide →](https://www.bentega.io/incentive-compensation)

 Guide

[Sales commission](https://www.bentega.io/sales-commission) 

[Read the sales commission guide →](https://www.bentega.io/sales-commission)

 Guide

[Bonus plans](https://www.bentega.io/bonus) 

[Read the bonus guide →](https://www.bentega.io/bonus)

 Guide

[SPIF](https://www.bentega.io/spif) 

[Read the SPIF guide →](https://www.bentega.io/spif)

 Guide

[On-target earnings](https://www.bentega.io/on-target-earnings) 

[Read the OTE guide →](https://www.bentega.io/on-target-earnings)

 Guide

[Performance pay](https://www.bentega.io/performance-pay) 

[Read the performance pay guide →](https://www.bentega.io/performance-pay)

### Go deeper

 Guide

[Incentive compensation management](https://www.bentega.io/incentive-compensation-management) 

[Read the ICM guide →](https://www.bentega.io/incentive-compensation-management)

 Template

[Compensation plan template](https://www.bentega.io/sample-sales-compensation-plans-free-guides-templates) 

[Download the template →](https://www.bentega.io/sample-sales-compensation-plans-free-guides-templates)

 Guide

[Sales commission structures](https://www.bentega.io/sales-commission-structure) 

[Compare structures →](https://www.bentega.io/sales-commission-structure)

 Guide

[KPIs and metrics](https://www.bentega.io/kpis-and-metrics) 

[Read the KPI guide →](https://www.bentega.io/kpis-and-metrics)

### Explore solutions

 Product page

[Product](https://www.bentega.io/product) 

[Explore the product →](https://www.bentega.io/product)

FAQ

## Incentive compensation glossary FAQ

Use these FAQ entries to answer common definition-style questions and route readers to the most relevant next step.

### What does the term incentive compensation mean?

 Incentive compensation is performance-linked pay used to reward specific outcomes, behaviors, or business results.

It can include commissions, bonuses, SPIFs, OTE-based payouts, KPI incentives, Customer Success incentives, performance pay, and broader variable pay. A good incentive compensation plan explains who is eligible, what counts, how payout is calculated, when payout happens, and how results are reviewed.

[Read the incentive compensation guide →](https://www.bentega.io/incentive-compensation)

### What is incentive compensation management?

 Incentive compensation management is the workflow for managing plans, calculations, approvals, visibility, and payout outputs.

 It connects plan rules, source data, payout formulas, exceptions, approval workflows, payout statements, audit trail, and finance-ready outputs. The goal is to make incentive compensation easier to calculate, review, explain, and manage.

[Read the ICM guide →](https://www.bentega.io/incentive-compensation-management)

### What is the difference between incentive compensation and variable pay?

 Variable pay is compensation that changes based on performance or plan rules. Incentive compensation is the broader performance-linked pay category.

The terms often overlap. Variable pay usually refers to the non-fixed part of compensation, while incentive compensation focuses on the purpose of that pay: rewarding specific outcomes, behaviors, or business results.

[Read the incentive compensation guide →](https://www.bentega.io/incentive-compensation)

### What is the difference between commission and bonus?

 Commission is usually tied to sales results. A bonus can be tied to individual, team, company, or KPI-based performance.

 Sales commission often depends on revenue, bookings, margin, quota attainment, or crediting rules. Bonus plans can be broader and may reward strategic goals, company performance, team outcomes, or measurable KPI achievement.

[Read the bonus guide →](https://www.bentega.io/bonus)

### What is the difference between SPIF and bonus?

 A SPIF is usually a short-term incentive campaign. A bonus can be one-time or recurring and may support broader goals.

SPIFs are often used to create focus around a specific action, product, time period, or GTM priority. Bonuses can be used for individual performance, company performance, team outcomes, KPI achievement, or broader variable pay programs.

[Read the SPIF guide →](https://www.bentega.io/spif)

### What is OTE?

 OTE stands for on-target earnings, or expected total earnings when target performance is achieved.

OTE usually combines base salary and target variable pay. It is common in sales compensation and target-based compensation plans because it helps communicate expected earnings at 100% performance.

[Read the OTE guide →](https://www.bentega.io/on-target-earnings)

### What is the difference between quota and attainment?

 Quota is the target. Attainment measures performance against that target.

For example, if an employee has a quota of €1,000,000 and credited performance of €800,000, attainment is 80%. Attainment can influence commission payout, bonus achievement, OTE-based payout, or eligibility for accelerators.

[Use the OTE calculator →](https://www.bentega.io/tools/ote-calculator)

### What is an accelerator?

 An accelerator increases payout when performance exceeds a defined threshold.

Accelerators are common in sales compensation plans. They are often used to reward overperformance above quota and create more upside for strong results.

[Compare sales commission structures →](https://www.bentega.io/sales-commission-structure)

### What is a payout cap?

 A payout cap is a maximum payout limit.

Caps can help control cost exposure, but they should be communicated clearly before the plan starts. Employees should understand where upside ends and how the cap affects payout calculations.

[Download the compensation plan template →](https://www.bentega.io/sample-sales-compensation-plans-free-guides-templates)

### What is a payout statement?

 A payout statement explains what was earned, why it was earned, and when it will be paid.

A good payout statement should make the calculation understandable. It can show plan rules, performance results, payout logic, adjustments, approval status, and payout timing.

[Read the ICM guide →](https://www.bentega.io/incentive-compensation-management)

### What does finance-ready output mean?

 Finance-ready output means payout information is structured and approved for downstream finance processes.

After calculations and approvals, Finance needs reliable payout outputs for review, reporting, accruals, and handoff. A finance-ready output should be clear, structured, traceable, and connected to the approved payout process.

[Explore Finance incentive control →](https://www.bentega.io/solutions/cfos-finance-incentive-control)

### Is incentive compensation only for sales teams?

 No. Sales commissions are one type of incentive compensation, but the category is broader.

Incentive compensation can also apply to Customer Success, Finance, HR, GTM teams, managers, and company-wide performance programs. It can include bonuses, KPI incentives, performance pay, SPIFs, OTE-based payouts, and broader variable pay.

[Explore Customer Success incentives →](https://www.bentega.io/use-cases/customer-success-incentives)

### How does Bentega help manage incentive compensation terms and workflows?

 Bentega helps teams manage the incentive compensation workflow from plan rules to finance-ready outputs.

Bentega is built for incentive compensation management workflows: plan rules, source data, calculations, exceptions, approvals, payout visibility, statements, audit trail, and finance-ready outputs. It helps teams move from manual tracking to a clearer, more governed process.

[Explore the product →](https://www.bentega.io/product)

 Understand the terms. Improve the workflow.

## Ready to manage incentive compensation with more clarity?

 Glossary definitions are a useful starting point. The next step is making sure your plans, rules, calculations, approvals, statements, and finance-ready outputs are clear enough to manage in practice. Bentega helps teams manage incentive compensation as a workflow: plan rules, source data, calculations, exceptions, approvals, visibility, statements, audit trail, and finance-ready outputs.

[Read the incentive compensation guide →](https://www.bentega.io/incentive-compensation) [Check your ICM score →](https://www.bentega.io/icm-readiness-checklist-bentega)

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