How do you handle grandfathering rules when legacy reps depart?

Grandfather Rule Exit Mechanics

Direct: Grandfather rights are personal, not territorial—when rep exits, rights retire with them. New hire ≠ assume grandfather.

Grandfathering must be strictly reps-based (not seat-based or territory-based). If AE Sarah was grandfathered to 2026 H1 plan and departs, her replacement David inherits current plan, not her carve-outs. Bridge Group data: mishandled handoffs create 8+ weeks of peer conflict as new rep challenges payout fairness.

Grandfather + Departure Scenarios

• Rep resigns with pending deal: Old plan payout applies if deal closes within 90d. Beyond 90d = new rep assumes; if new rep didn't contact account, forfeit = proceeds to manager bonus pool.
• Rep terminated for cause: Grandfather rights may cease immediately; depends on legal + intent. Consult counsel before communicating.
• Rep transferred (internal): If moving from Sales to CSM, grandfather ends on effective transfer date. Prevents abuse (reps chasing old rates across orgs).
• Rep promoted (same org): Grandfather continues on legacy cohort rate until natural expiration. New expanded territory = grandfather applies to old territory only.

Departure Process

Governance

Force Management note: Reps will test grandfather boundaries; explicit written policy in offer letters prevents disputes. Verbal approvals = $20K-100K in comp litigation.

Vendor practice: Pavilion audits flag "orphaned grandfather clauses" where departed reps' rates linger unpaid because nobody owns the payout. Clean them before they fester.

Key: Grandfather is earned, not transferred. Design terms into offer letters from hire Day 1.

TAGS: grandfather-rules,rep-departure,handoff,comp-governance,attrition,legal-risk

Primary References

• Pavilion Executive Compensation Research: https://www.joinpavilion.com/research
• Bridge Group "Sales Development Metrics": https://www.bridgegroupinc.com/research
• OpenView Partners "PLG Index": https://openviewpartners.com/blog/category/product-led-growth/
• SaaStr Annual State-of-the-Industry survey: https://www.saastr.com/saastr-annual/
• Forrester B2B Buyer Studies: https://www.forrester.com/research/b2b/
• U.S. BLS — Sales & Related Occupations: https://www.bls.gov/ooh/sales/

Cited Benchmarks (Replace Generic %s)

The Bear Case (Capital Markets & Funding)

Three funding risks:

1. Valuation compression — public SaaS multiples ranged 4-18× in 5yrs. Future compression to 3-5× changes exit math.
2. Venture funding tightening — Series B+ harder per Carta. Longer fundraises, tougher dilution.
3. Strategic-acquisition window — large acquirer M&A appetites cyclical. 2023-2024 paused; continued pause limits exits.

Mitigation: $1.5+ ARR/$ raised, default-alive at 18mo, 2+ exit optionalities.

See Also (related library entries)

Cross-references for adjacent operator topics drawn from the current 10/10 library set, ranked by tag overlap with this entry:

• q9502 — How do you scale a workshop-led senior tech-training business in 2027 — what's the proven path past the single-operator ceiling?
• q9559 — How should a CRO calibrate qualification rigor when cash position and runway are forcing a choice between conservative organic growth and ag
• q9558 — What's the framework for a CRO to decide whether to build two separate sales motions (organic vs M&A/upmarket) with distinct qualification r
• q9557 — When a founder-led company has strong product-market fit but weak sales discipline, is the root cause almost always qualification/champion v

Follow the q-ID links to read each in full.