Plan Approval
2 terms in Policy
Executive Sign-off
#Executive sign-off is the formal authorization process requiring designated senior leaders to review and approve a compensation plan before it can be implemented, communicated to participants, or modified during the plan year. This governance control ensures that compensation plans align with the organization's financial targets, strategic priorities, and risk tolerance. Executive sign-off typically involves the Chief Revenue Officer (or SVP Sales), Chief Financial Officer, and Chief Human Resources Officer, each reviewing the plan from their respective perspectives — revenue strategy, financial impact, and talent/compliance. The sign-off process creates an auditable record of who approved what and when, which is essential for SOX compliance, external audit support, and dispute resolution. Plan modifications after initial sign-off usually require a change-order process with the same executive approvals.
The 2026 compensation plan for the North America sales organization goes through executive sign-off in December 2025. The CRO approves the plan design and quota methodology, confirming alignment with the $85M revenue target. The CFO approves the financial model showing projected incentive spend of $12.3M (14.5% cost of sales). The CHRO confirms compliance with employment law in all 38 states where reps are located. All three sign digitally, and the plan is released for participant communication on January 3.
Section 3.1 — Executive Authorization: No compensation plan shall be implemented or materially modified without written approval from the following executives: (a) Chief Revenue Officer or SVP Sales; (b) Chief Financial Officer; and (c) Chief Human Resources Officer. Approval shall be documented via the Plan Authorization Form, which shall be retained for a minimum of seven (7) years. Plans not bearing all required signatures shall not be administered.
Executive Sign-off Tracking Report — shows each plan document's approval status, executive approver names, signature dates, any conditions or modifications noted during review, and outstanding plans awaiting authorization.
Legal & Compliance Review
#Legal and compliance review is a mandatory evaluation of compensation plan documents, policies, and procedures by the organization's legal counsel and compliance function before plan implementation or modification. This review ensures that the plan complies with applicable employment laws (FLSA, state wage and hour statutes), anti-discrimination regulations (Equal Pay Act, Title VII), tax withholding and reporting requirements, securities regulations (if equity-based components are included), and industry-specific regulations (such as FINRA for financial services or Anti-Kickback Statute for healthcare). The review also examines contract language for enforceability, at-will employment preservation, intellectual property and non-compete provisions embedded in plan agreements, and data privacy compliance for participant information handling. Legal review findings may result in required plan modifications before executive sign-off can proceed.
During the 2026 plan review, legal counsel identifies three issues: (1) the new SPIF program for the California team must comply with AB 1228's commission wage statement requirements, (2) the clawback provision language needs revision to align with the 2024 SEC clawback rule adopted by the company, and (3) the independent contractor plan for brand ambassadors must be restructured to avoid worker misclassification risk under the ABC test. Legal provides revised language for each issue, delaying plan rollout by 10 days.
Section 3.2 — Legal and Compliance Review: Prior to executive sign-off, all compensation plans and material amendments shall be reviewed by the Legal Department and the Compliance function. The review shall assess: (a) compliance with federal, state, and local employment and wage laws; (b) consistency with anti-discrimination requirements; (c) tax withholding and reporting obligations; (d) enforceability of plan terms; and (e) data privacy requirements. The Legal Department shall provide a written clearance memorandum or a list of required modifications within fifteen (15) business days of submission.
Legal Review Status Report — lists each plan document submitted for legal review, review start date, issues identified, required modifications, clearance status, and anticipated clearance date.