7.1.3 Compensation package for Key Account Manager

The compensation package for the MTPRO Key Account Manager consists of a base salary and a target incentive amount. The two components together are called target total cash compensation (TTCC) (Cichelli David J., page 22 - 26). The target incentive amount is tied to various target achievement rates. These target achievement rates are dependent upon individual performance measures.

A score scheme is the base for the determination of the respective rates as illustrated below (Küng/ Schilling/ Toscano, 160-161):

• A score is assigned to each target achievement/criterion
• Every score point is equal to a fixed value ( e.g. 200 USD )
• The time period is based on a yearly payment interval

The following score scheme (table 23) will be applied by MTPRO. It illustrates what targets, weightings and target achievement rates are applied.

Table 23: Score scheme for target incentive amount (Source: On the base of Küng/ Schilling/ Toscano, page 160 – 161)

The performance measure for the 100% achievement rate is based on the scorecard, illustrated in chapter 7.3 (table 26).

The TTCC in terms of USD for a Key Account Manager varies from country to country. For instance, the TTCC of a MTPRO Key Account Manager in a Western European market organisation could look as follows:

The percentage split, called pay mix, between the base salary and the target incentive amount is 80:20. This split not only represents an attractive base salary but also an attractive target incentive amount. In addition, there is an appealing leverage for the upside earning potential. The leverage is a multiplier of the target incentive. (Cichelli David J., page 24 – 26). The TTCC for MTPRO in figure 23 represents a 2.5x leverage. This leverage can be achieved with a total score of 250 at individual > 125% achievement rates (see table 23).

cash compensation" class="wp-image-9140 size-full" height="282" src="https://sgbs.ch/wp-content/uploads/Figure-23-Target-total-cash-compensation.png" width="603"> Figure 23: Target total cash compensation (Source: On the basis of Cichelli David J., Figure 2-7, page 25)

The Target total cash compensation package of a fictitious MTPRO Key Account Manager Jack Thompson could look like as follows:

Calculation of the total score:

Table 24: Example of a fictitious score calculation (Source: On the base of Küng/ Schilling/ Toscano, page 161)

Table 25: Example of a target total cash compensation (Source: On the basis of Küng/ Schilling/ Toscano, page 161)