constructing a compensation clause for a sales manager

ChrisP

I am trying to figure out how (what language to use) to construct a compensation clause for an agreement between myself and a manufacturer. I have examples of independent rep agreements of the type that the reps i end up hiring would sign. The difference in/addition of language would result from my  acting, in effect, as a director of/vp sales for the company that manufactures the products. I would select various independent manufacturer`s reps in specific US territories who would add the manufacturer`s product line(s) to their line card and I would then be responsible for actively managing the sales fucntion, i.e. all of their related activities on behalf of the manufacturer, communicating and coordinating with them, etc. The reps would be compensated soley by commission per a standard rep agreement. I`m trying to figure out how to write the language to be included in an agreement between me and the manufacturer that would describe my receiving an over-ride or percentage of the sales of each individual rep`s sales. I`m not the first person to contemplate formalizing this type of arrangement so, I`m hoping someone has an example of something  I could review that describes this form of compensation. I know that i could hire an attorney to do it--it`s pretty standard stuff but am hoping to avoid incurring that expense. Thanks in advance. --Chris

keycon

Chrisp,
This is more of a "qualifying" response versus a straight-out answer.
Kind of sounds to me as if you are trying to be a manufacturer`s VP of sales. Not quite sure how this is working. Kind of sounds like you could be trying to be a rep agency/broker where you hire the reps and pay the commission. Not sure if you are paying the commissions to the individual reps or the manufacturer will pay them. Any answers to these questions? All scenarios would require different contract language - IMHO.
If you are the one taking on full responsibility for the line(s), then why not write your contract with your percent take built in? Then you take your cut for management of the account before you pay your reps.
Look forward to your reply.
R@
 

ChrisP

You`re correct in that I would, in effect, be functioning as a vp sales for the manufacturer. I would select and hire the reps on behalf of the manufacturer with whom each rep would have a legal relationship detailed in a signed rep agreement. And the manufacutere would have sole responsibility for paying those reps their commissions--so there wouldn`t be any legal/formal employer/employee relationship between me and any rep. There would be a functional relationship in as much as I would relate to each routinely and direct their efforts as well as serve as the primary conduit of communication in both directions between the company/its management and the reps. So, all I really hope to accomplish with the proper language in an agreement is to memorialize the fact that the manufacturer is to pay me an amount calculated as a percentage of each rep`s sales that`s over and above whatever commission is earned by the rep. It can be termed a "commission override" or could be described in any other manner that accurately depicts the nature of the arrangement which I`ve come to in principle with th manufacturer.
Does that help clarify/answer your questions? Any suggestions as to how this should be worded?
Thanks,
Chris
 

David

There`s still a few things I`m not clear on, such as if you`re earning a greater share of the rep`s commission after they get their cut or if you`re paid seperately using a different formula.   You should also make clear what rights the employer has to your sales reps and what information they can or cannot demand.
 
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Chris P and Spishak Corp. enter into an agreement in which Chris P, who will be referred to hereafter as "Sales VP", will serve in a position to supervise and direct the independent sales agents to sell products on the behalf of, Sphishak Corp hereafter referred to as "Company", which is a business based in the State of _______ engaged in the business of manufacturing _________. 
Spishak Corp. agrees to compensate Sales VP a commission of _ % for any successful sale of its products that are processed by Sales VP or his authorized agents.   This commission rate is a percentage of the gross revenue of each purchase order and not the net amount.
 

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I apologize if it seems clumsy but it`s just to give you an idea of how to start off this kind of agreement.  Some critical points to touch on:
- Right to Preserve Contacts (Any contacts information stays with you if you leave the company)
- Non-compete/Non-disclosure Clause (Your employer will probably ask for this.  If not, it may not be a good sign of a company that will be around for much longer.)
- Terms of Employment (Stipulate job protection here so you can`t be arbirarily terminated.  You can also detail sick days and any accomodations you`ll need here.)
 
This is by no means a comprehensive list.  My advice to you is to compose the agreement as best you can using books and resources online.  (I can provide links if you need them.)  Afterwards, you can give it to a lawyer to proofread and edit for anything you`ve missed.  It`s the same thing for your tax deadline where you show the return to the CPA after you`ve done the grunt work.  You get a clear understanding of the agreement if you`re helping compose it and you save the $100 an hour lawyer`s fee.