I get questions periodically from sales people asking for definitions of the jargon in their comp plans.  Here are five terms explained:

On Target Earnings (OTE)
On Target Earnings is the total amount you are expected to earn in a year, including base pay, commissions, MBO’s, etc.

Draw/Recoverable Draw
When you start a new job you are likely to experience a ramp up period where you will typically earn less than you are expected to earn once you are ramped up. To bridge that gap many companies will provide a draw to bring you up to the level of the expected earnings. A recoverable draw is one that must be repaid once you are ramped up.  Typically that ramp up period lasts for 3 to 6 months, and recoverable draws are deducted from commissions made after that time.  Commissions made prior to the end of the draw period will offset the draw, so the draw will be reduced accordingly.

Burn Rate
If you sell services then the burn rate is the rate you will get paid against those services. For example if you sell services that will last for a year each month you can be paid your commission on the burned amount.  Typically this is one twelfth or the actual amount burned.  This was an SEC rule change that occurred several years ago and only applies to public companies.

Cap
A cap is where your commissions are limited no matter how much you sell. You will only be allowed to earn so much commission.  In many instances it’s in place to protect the management positions.  With no cap in place a management position can often mean a step down in earnings for a sales person and so some balk.  A cap can be used to keep management positions attractive.  In my opinion they can be avoided if the management position compensation plan is structured properly.

Accelerators
Once you hit 100% of your quota many companies will incentivize you to continue to sell more by providing accelerators, meaning that once you go over 100% you will actually earn a higher percentage rate against the sales you make.  As you break other thresholds accelerators can get applied downwards to include older deals.  For example, say hitting 100% earns an extra 2.5% per percentage point and you go on to break 110% which gives you an additional 2.5% totaling 5%, some companies will apply that 5% all the way down to deals made in the 100% to 109% category.