You have likely heard the advice: "Salespeople are coin-operated. Just show them the money." This reductionist thinking is why the average tenure of a VP of Sales has plummeted to just 19 months. As a founder, you are desperate to offload the burden of revenue generation (founder extraction), so you hire a resume with a "Rolodex," offer a standard $350k OTE, and hope for the best. Eighteen months later, you are firing them.
The problem is not the person; it is the incentive structure. Traditional compensation plans reward bookings, not business. If you pay your VP of Sales 50% of their OTE based solely on signed contracts—regardless of payment terms, gross margin, or churn risk—you are effectively paying them to destroy your unit economics. They will close low-margin deals to hit quota, heavily discount to pull deals forward, and ignore the "boring" mechanics of customer success.
For a Series B or C company doing $10M–$50M in revenue, this misalignment is fatal. You are likely burning cash to grow. If your Customer Acquisition Cost (CAC) Payback Period drifts from 12 months to 18 months because your VP is incentivized to sign bad revenue, you will run out of runway before you reach your next valuation inflection point. You don't need a coin-operated mercenary; you need a revenue architect who speaks fluent EBITDA.
Stop using generic recruiter templates. Your compensation package must force alignment between sales activity and company health. Here are the 2025 benchmarks and structural adjustments for a Series B/C VP of Sales.
The standard split remains 50% Base / 50% Variable. For a competent Series B VP, market data places the On-Target Earnings (OTE) between $300,000 and $400,000. Base salaries generally cap around $200k-$220k. Do not let a candidate negotiate a 70/30 split; if they want safety, they are not a VP of Sales.
Never pay 100% of the variable component on simple Annual Recurring Revenue (ARR) bookings. Split the variable bucket to protect your downside:
Equity is the retention hook. For a Series B VP, the grant range is typically 1.0% to 1.5% (fully diluted), with a standard 4-year vest and a 1-year cliff. Top-tier "Stretch VPs" or CROs may command up to 2.5%, but 1% is the baseline for a qualified leader.
Your offer letter must include a strict clawback clause. If a customer churns within 6 months (or fails to pay the first invoice), 100% of the commission paid on that deal must be returned or deducted from future payouts. This prevents the "sign and run" behavior that inflates pipeline optics but kills NRR.
The most dangerous period is the first six months. Most founders offer a "non-recoverable draw" (guaranteed commission) for 3-6 months to cover the ramp time. This is a trap. It signals that you expect zero performance during onboarding.
Instead of a guarantee, structure a recoverable draw against future commissions, or set realistic ramp quotas (e.g., Month 1: 0%, Month 3: 50%, Month 6: 100%). This keeps the pressure on pipeline generation from Day 1.
In the first two quarters, consider tying 20-30% of the variable comp to Management by Objectives (MBOs) rather than revenue. These MBOs should be structural:
By forcing these operational milestones, you ensure that even if they miss the revenue number in Q1, they are building the systems that allow for scalable growth, not just heroics.
A bad VP of Sales hire costs the organization approximately $1.3 million in hard costs and opportunity loss. You cannot afford to get this wrong. Structure the compensation to filter out the mercenaries during the interview process. If a candidate balks at a clawback clause or a margin-based commission gate, they just told you they don't care about your profitability. Let them go work for your competitor.
