Opinion ID: 2813115
Heading Depth: 3
Heading Rank: 1

Heading: StorageTek’s Incentive Plan

Text: Every year StorageTek issued three documents that defined Lawson’s compensation for that year. The first, called a “Sales Executive Incentive Plan,” explained the compensation plan’s general terms and conditions, including the terms under which sales would qualify for commissions. The second document, the “Incentive Plan Administration Document” or “IPAD,” 4 Nos. 13-1502 & 13-1503 explained how commissions would be calculated and also contained additional terms and conditions applicable to StorageTek’s North America sales territory. Finally, the “Quota Document” detailed Lawson’s individualized sales goals and expected commissions. The first of these documents incorporated the other two by reference, so together the three documents constituted Lawson’s entire compensation agreement. The documents specified that Lawson’s employment was at will. We’ll refer to the plan documents collectively as the “incentive plan” (or just the “plan”) unless the context requires otherwise. As a general matter, StorageTek’s incentive plan imposed three basic requirements for a sale to qualify for a commission: (1) the sale must be for “Enterprise Support Services” or “Remote Managed Services”; (2) the contract must meet StorageTek’s revenue recognition standards; and (3) the sale must be final and the customer invoiced for the transaction. The sale at issue here initially pertained to Enterprise Support Services, a term with its own technical meaning. With some exceptions, these were contracts to support third-party (not StorageTek’s) software and equipment. This litigation concerns the 2005 incentive plan. To receive commission credit for new business under the terms of that plan, a new contract had to be executed and invoiced during StorageTek’s 2005 fiscal year, which was calendar year 2005. The plan also awarded commissions for contracts executed before calendar 2005 but invoiced on “January 1, or later in 2005.” Nos. 13-1502 & 13-1503 5 Renewal business was treated differently under the plan. StorageTek did not compensate renewed contracts as generously as new contracts. The company parceled out its existing service contracts between its sales executives by territory. Sales executives could claim commissions for renewals of the contracts assigned to them in their annual incentive plans. If a sales executive thought a certain sale deserved special treatment, the executive could file a written request with the company’s North America Incentive Plan Committee, with copies to local management. The committee would review the request and notify the sales executive of its decision. StorageTek’s 2005 incentive plan closed with this section, the meaning of which is central to this case: This Plan is effective as of January 1, 2005, re- gardless of the specific date of publication or distribution, and supersedes all prior Plans, provisions, precedents, compensation arrange- ments, memoranda and incentive programs. It will remain in effect until a subsequent plan, or amendment to the Plan, becomes effective. All sales eligible for quota credit under this Plan, or any amendment, by the end of the fiscal year 2005 will be payable under this Plan. Sales not eligible will be payable under the Plan in effect at the time quota credit is earned. Incentives are not earned and are not wages until all requirements under this Plan, the Quota Document, the IPAD [the Administrative Document] and any amendments to 6 Nos. 13-1502 & 13-1503 these documents have been met as determined solely by the Plan Administrator. (Emphases added.)