CHRO Advisor

VP Sales comp structure is one of the most consequential decisions at your stage — a bad structure misaligns incentives and either breaks the hire or breaks your P&L. Here's a complete framework.

Base + Variable split: The $80K base / $100K variable at target is reasonable for a $2.3M ARR company. However, the variable structure matters more than the split. Here's what I'd recommend:

• 50% of variable tied to team quota attainment (their downside protection)
• 50% tied to personal pipeline contribution (critical — VP Sales at your stage needs to carry a bag, not just manage)
• Accelerator above 100% quota: 1.5x OTE rate for every dollar above target. This is what attracts the best candidates.

Quota: The standard formula is 4–6x OTE for SaaS VP Sales. At $180K OTE, that's a $720K–$1.08M individual quota (personal + team aggregate). At $2.3M ARR, a $800K quota is asking them to grow ARR by 35% — achievable but aggressive. For year 1, I'd structure: Q1 = ramp (50% quota), Q2 = ramp (75%), Q3–Q4 = full $200K/quarter. Full-year effective target: ~$575K.

Equity: VP Sales at Series A/B stage: 0.3–0.6% on a 4-year vest, 1-year cliff. At your ARR ($2.3M, likely $8–12M valuation), 0.4% = $32–48K at current value. Use option value calculator at 5x–10x exit to show total comp picture in offer. Standard 4-year vest, 1-year cliff is non-negotiable for VP+ roles.

The protection clause you need: 90-day ramp period where base only is paid (no variable) — this protects you if the hire doesn't work out and them while they're building pipeline. Also include a clawback provision on commissions if deals churn within 90 days of close.

The delay is costing you more than you realize — both in business impact and in fairness to her. Prolonged underperformance with no action creates a situation where she's eventually blindsided by a termination she didn't see coming. That's less humane, not more.

First, verify: is this a skills-ceiling problem or a support/clarity problem? Two years in, has she had explicit, documented performance feedback? Has she been given specific targets she's missed? If not, what you have is a performance conversation gap, not a performance problem. Proceeding to termination without documented feedback is both legally risky and genuinely unfair.

If she hasn't had structured feedback, run a Performance Improvement Plan (PIP) — but do it right:

• 60-day PIP with 3–4 specific, measurable outcomes: "MQL volume to 80/month by March 1," "Marketing attribution model implemented and validated by February 15," "CAC by channel reported accurately for Q1."
• Weekly check-ins with written notes.
• Honest framing: "The role has evolved. Here's what it requires now. I want to give you a real chance to show you can do it."
• A genuine PIP is not a paper trail for firing — it's a structured opportunity. Some people rise to it.

If the decision is already made (and it sounds like it might be): Don't do a PIP for cover. That's cruel. Have the honest conversation: "The marketing role needs capabilities that are different from what you were hired to do 2 years ago. I don't think that's your fault, but I need to make a change."

Severance and transition: For a 2-year employee and 4th hire, offer 2–3 months severance, extended healthcare, and a strong reference. Help her land well. That's how you honor the relationship while doing what the business needs.