Sample Total Rewards Governance Framework

Sample_Documents

DISCLAIMER: This is a sample template provided for informational purposes only. It does not constitute legal, tax, or financial advice. Organizations should consult their own legal and tax advisors and tailor this document to reflect their specific business needs, geographies, and applicable laws.

Total Rewards Governance Framework: <Company Name>

Document Type	Total Rewards Governance Framework
Category	Compliance & Governance
Version	v<Number>.<Number>
Effective Date	<Date>
Next Review Date	<Date> (12 months from Effective Date unless otherwise noted)
Document Owner	Head of Total Rewards, <Company Name>
Document Number	TR-GOV-<Number>
Supersedes	TR-GOV-<Number> dated <Date>
Approved By	CHRO; CFO; General Counsel; Total Rewards Governance Committee
Applicable Geographies	Global, with local addenda for <Country>/<Region> variations

Revision History

Version	Date	Summary of Changes	Author	Approver
v1.0	<Date>	Initial release	<Name>	CHRO; CFO; GC
v1.1	<Date>	Added equity grant cap and clawback details	<Name>	TR Governance Committee
v1.2	<Date>	Updated market data sources and aging assumptions	<Name>	Head of TR

Purpose and Objectives

• Establish a consistent, compliant, and equitable framework for designing, approving, administering, and monitoring all Total Rewards programs at <Company Name>.
• Define decision rights, approval thresholds, and controls to ensure financial stewardship and alignment with <Company Name>’s strategy and values.
• Promote transparency, internal equity, and pay-for-performance while complying with applicable laws and regulations in each <Country> where <Company Name> operates.
• Provide practitioners with clear processes and standards for annual cycles, off-cycle actions, vendor management, and exception handling.
• Enable timely, empathetic communication to employees and managers.

Scope and Applicability

In Scope

• Base pay, variable pay (short- and long-term incentives), sales compensation, and recognition programs.
• Benefits and perquisites, retirement plans, wellness programs, time-off, and leaves.
• Job architecture, leveling, market pricing, salary structures, geographic differentials.
• Governance of global mobility and relocation programs.
• Vendor selection and management associated with Total Rewards (e.g., <Vendor Name>).
• Systems and data processes that support Total Rewards (e.g., <System Name>, payroll, HRIS).
• Compliance monitoring, audits, financial accruals, and reporting related to Total Rewards.

Out of Scope

• Non-compensation policies unrelated to rewards (e.g., code of conduct, IT security, travel policy), except where they intersect with rewards governance.
• Talent acquisition process steps beyond compensation offer creation and approval.
• Performance management content design (covered in separate policy), except where tied to rewards outcomes.

Applicability

• Applies to all employees of <Company Name>, including full-time, part-time, and temporary employees, unless otherwise stated in country-specific addenda.
• Contractors, interns, and agency workers are excluded unless expressly included by local policy.
• Where conflicts arise with local law or collective agreements, the stricter requirement applies, and local addenda supersede global guidance for that location.

Governance Principles

• Equity and Fairness: Comparable roles at comparable performance and experience levels receive comparable pay within established ranges.
• Compliance by Design: Program design embeds legal and tax requirements for each relevant <Country> and is validated by Legal and Tax.
• Financial Stewardship: Rewards investments align with approved budgets and deliver measurable business outcomes.
• Data-Driven Decisions: Market data, internal equity analysis, and performance results inform decisions.
• Simplicity and Clarity: Programs are understandable for employees and administrable at scale.
• Transparency and Accountability: Defined decision rights, audit trails, and regular reporting to leadership.
• Global Consistency with Local Relevance: A common framework with controlled local adaptations.
• Privacy and Security: Confidential handling of employee and plan data in line with <Country> data protection laws (e.g., GDPR-equivalent requirements).

Decision Rights and Accountability

Decision Area	Accountable (A)	Responsible (R)	Consulted (C)	Informed (I)
Rewards strategy and philosophy	CHRO	Head of TR	CFO; GC; CEO	Board HR/Comp Committee
Pay ranges and structures	Head of TR	Comp COE	HRBPs; Finance	HR Leadership
Annual merit and bonus cycle design	Head of TR	Comp COE; HRIS; Payroll	Finance; Legal	Managers; Employees
Equity plan design and share reserve	Board HR/Comp Committee	Head of TR; Legal	CFO; External Counsel	Internal Audit
Sales compensation plans	CRO; Head of TR	Sales Comp Team	Finance; Legal; HRBPs	Sales Leadership
Benefits plan design	Head of Benefits	Benefits Team	Legal; Finance; Vendors	Employees
Vendor selection and management	Head of TR	Procurement; TR Team	Legal; InfoSec	Finance
Exceptions above thresholds	CHRO	HRBPs; Comp COE	Finance; Legal	Internal Audit

Roles and Responsibilities

Total Rewards Center of Excellence (TR COE)

• Design and maintain pay structures, incentive plans, and benefits programs.
• Conduct market benchmarking, pay equity reviews, and program effectiveness analyses.
• Define annual cycle parameters (eligibility, budgets, guidelines) and system configurations.
• Maintain governance documentation, approval matrices, and local addenda.

HR Business Partners (HRBPs)

• Advise managers on offers, promotions, and pay actions within guidelines.
• Escalate exceptions and facilitate required approvals.
• Ensure local adoption and adherence to governance processes.

Finance

• Provide budget targets, validate accruals, and forecast total rewards costs.
• Review and co-approve plan funding, caps, and material policy changes.

Legal and Compliance

• Review plans and policies for legal, tax, and regulatory compliance in each <Country>.
• Manage plan documents, required filings, and litigation risk mitigation.

Payroll

• Ensure accurate, timely payments and withholding for cash compensation and benefits.
• Maintain audit trails and collaborate on year-end processing.

HRIS and Analytics

• Configure systems to enforce eligibility rules and approval workflows.
• Ensure data quality, security, and reporting accuracy.

Procurement and Vendor Management

• Run RFPs, manage contracts, and monitor SLAs for rewards vendors.

Internal Audit

• Conduct periodic audits of compliance with policy and controls.
• Validate segregation of duties, approvals, and data integrity.

People Managers

• Make recommendations within guidelines, provide performance input, and communicate decisions to employees.

Employees

• Review plan communications, provide accurate personal data, and raise questions to HR as needed.

Total Rewards Philosophy and Design Guardrails

• Market positioning: Target <Percentage>% of market median for mature roles; allow <Percentage>% variance based on performance and scarce skills.
• Pay mix:
  • Individual contributors: base <Percentage>%, bonus <Percentage>% target, LTI <Percentage>% where eligible.
  • Managers: base <Percentage>%, bonus <Percentage>% target, LTI <Percentage>%.
  • Executives: base <Percentage>%, bonus <Percentage>% target, LTI <Percentage>%.
• Differentiation: Merit budgets and bonuses differentiated by performance category (e.g., Exceeds <Percentage>%, Meets <Percentage>%, Developing <Percentage>%).
• Affordability: Annual total rewards budgets approved by CFO with tolerance of <Percentage>%.
• Pay equity: Semi-annual pay equity analyses with remediation plans approved by CHRO.

Job Architecture and Market Data Governance

Job Architecture

• Use a global job catalog with standardized job families, sub-families, and levels (e.g., Level <Number> to Level <Number>).
• New job creation and leveling requires TR COE review; material changes require Head of TR approval.
• Role descriptions must include scope, impact, knowledge, complexity, and supervision parameters.

Market Data Sources

• Primary: Surveys from <Vendor Name> and <Vendor Name>; secondary: local surveys for niche markets.
• Data hygiene: Use at least <Number> matches per role; remove outliers beyond +/- <Percentage>% of median.
• Aging assumptions: Age data at <Percentage>% annually as of <Date>.
• Currency and FX: Use <System Name> rates as of <Date>; apply geographic differentials per <Country> or <City> published indices.

Salary Structures and Base Pay Governance

Structure Design

• Structure type: Global grade-based ranges with midpoint progression of <Percentage>% between adjacent grades.
• Range widths:
  • Non-exempt: <Percentage>%
  • Exempt: <Percentage>%
  • Executive: <Percentage>%
• Minimum wage and pay transparency compliance per <Country> and <State/Province> laws.

Annual Merit Cycle

• Eligibility: Hired on or before <Date> and not on performance improvement plan unless approved by HRBP and TR COE.
• Budget: Global merit budget of <Percentage>% of eligible base payroll with local adjustments of +/- <Percentage>% based on market conditions.
• Guidelines by performance:
  • Exceeds: <Percentage>% to <Percentage>%
  • Meets: <Percentage>% to <Percentage>%
  • Developing: <Percentage>% to <Percentage>%
• Out-of-range handling:
  • Below minimum adjusted to minimum via merit first; red-circled employees receive lump sum up to <Percentage>%.
• Governance: Calibration required for orgs with headcount > <Number>; CFO and CHRO approve final spend.

Hiring, Promotion, and Off-Cycle Pay Actions

• Offers: Target between range minimum and midpoint; above midpoint requires HRBP and TR COE approval.
• Promotions: Typical increase <Percentage>% to <Percentage>% depending on level change; dual approvals for increases > <Percentage>%.
• Market adjustments: Based on verified market gaps > <Percentage>% and internal equity; require TR COE sign-off.
• Retention adjustments: Require documented risk-of-loss and business impact; capped at <Amount> or <Percentage>% of base without CHRO approval.
• Effective dates: First payroll after approval unless otherwise specified.

Short-Term Incentives (STI) Governance

Plan Design

• Eligibility: Regular employees at Grade >= <Number> with at least <Number> months of service.
• Targets and measures:
  • Corporate financial: <Percentage>% weighting (e.g., Revenue, Operating Income).
  • Functional/BU: <Percentage>% weighting.
  • Individual goals: <Percentage>% weighting.
• Funding: Corporate performance gates at <Percentage>% threshold; funding range 0x to <Number>.0x target.
• Payout caps: Individual payouts capped at <Percentage>% of target without CHRO approval; absolute cap <Amount> for non-executives.

Administration

• Proration: Leaves and mid-year hires prorated based on eligible days worked.
• Timing: Payout in <Month> following fiscal year-end, subject to approval and employment status rules for each <Country>.
• Clawback: Subject to clawback in cases of misconduct, restatements, or policy violations per Board-approved policy.
• Documentation: Annual plan document reviewed by Legal and approved by CHRO and CFO.

Sales Compensation Governance

• Plan architecture: Mix of base and variable with on-target earnings (OTE) aligned to market at <Percentage>% of median.
• Credit and quota: Clear crediting rules; quota-setting methodology documented; mid-year quota changes require CRO and Head of TR approval.
• SPIFFs and draws: SPIFFs capped at <Amount> per quarter; recoverable draws limited to <Number> months.
• Governance board: Sales Compensation Committee chaired by CRO with TR and Finance representation; monthly review of exceptions and performance.
• Controls: Segregation of duties between plan design, crediting, and payment; quarterly audits.

Long-Term Incentives (LTI) and Equity Governance

• Eligibility: Employees at Grade >= <Number> and high-impact roles; performance-based eligibility for others with CHRO approval.
• Vehicles: RSUs <Percentage>%, PSUs <Percentage>%, Options <Percentage>% of grant value.
• Grant cycle: Annual main grant in <Month>; off-cycle grants limited to critical hires and retention with CFO and CHRO approval.
• Vesting: Standard vest over <Number> years; PSUs vest on 3-year performance against metrics with threshold/target/max at <Percentage>%/<Percentage>%/<Percentage>%.
• Share usage: Annual burn rate not to exceed <Percentage>% of outstanding shares; overhang target <Percentage>%.
• Price and valuation: Fair value per <Valuation Method> on <Date>; adhere to insider trading policy and blackout windows.
• Country specifics: Local tax withholding and reporting per <Country>; mobile employee tracking with shadow payroll as needed.

Benefits and Wellbeing Governance

• Plan design: Align to market median cost and 75th percentile quality benchmarks; employer contribution targets of <Percentage>% for employee-only and <Percentage>% for family coverage where permitted.
• Eligibility and waiting periods: Standard waiting period <Number> days; immediate eligibility where legally required.
• Retirement: Employer match up to <Percentage>% of pay; vesting schedule per plan document.
• Leave and time-off:
  • Annual leave accrual rates by tenure bands; carryover cap <Number> days.
  • Paid holidays per <Country> calendar; floating holidays <Number> days.
  • Statutory leaves administered per local laws with integration to company-paid top-ups.
• Wellbeing: Annual budget of <Amount> per employee for wellbeing benefits; vendor performance KPIs reviewed semi-annually.
• Compliance: ERISA/ACA or equivalent requirements where applicable; plan documents and SPDs or local equivalents maintained by Benefits.

Recognition Programs Governance

• Programs: Spot awards up to <Amount> per instance; quarterly awards up to <Amount> with business case.
• Tax and reporting: Gross-up rules set per <Country>; reporting via payroll in the next cycle.
• Frequency: Limit to <Number> spot awards per employee per fiscal year without TR approval.

Global Mobility and Relocation Governance

• Policy tiers: Domestic, international short-term (<Number> to <Number> months), and long-term (>= <Number> months) assignments.
• Allowances: Housing, COLA, relocation capped at <Amount> per move; exceptions require CFO approval.
• Tax policy: Tax equalization for assignments > <Number> months; shadow payroll in host and home as required.
• Repatriation: Repatriation support and clawback provisions if leaving within <Number> months of return.

Data Privacy, Security, and Confidentiality

• Data minimization: Collect only necessary data for plan administration; retain per Record Retention section.
• Access controls: Role-based access in <System Name>; annual access review by HRIS and Internal Audit.
• Transmission and storage: Use approved secure file transfer; encryption at rest and in transit as per <Security Standard>.
• Privacy rights: Respect data subject rights per <Country> law; provide notices and obtain consents where required.
• Vendor obligations: Include data protection terms, standard contractual clauses, and breach notification timelines in contracts.

Financial Governance: Budgeting, Accruals, and Reporting

• Budgeting: Annual total rewards budget submitted by TR COE and approved by CFO by <Date>.
• Accruals:
  • STI accruals booked quarterly based on forecasted achievement and eligibility.
  • LTI expense recognized per <Accounting Standard>.
  • Benefits IBNR calculated with actuary <Vendor Name>.
• Forecasting: Rolling <Number>-quarter forecast for compensation cost and headcount.
• Reporting: Monthly dashboard to ELT with metrics on budget vs actual, headcount, compa-ratios, gender pay gap, and turnover.

Controls, Approvals, and Exception Management

Approval Matrix

Action	Standard Limit	Approver(s) Required
Base salary offer within range up to midpoint	Yes	Manager; HRBP
Base salary offer above midpoint to max	Yes	HRBP; TR COE
Base salary above range max	Exception	HRBP; Head of TR; CHRO
Promotion increase up to <Percentage>%	Yes	Manager; HRBP
Promotion increase > <Percentage>%	Exception	HRBP; TR COE; CHRO
Retention adjustment up to <Amount>	Yes	HRBP; TR COE
Retention adjustment > <Amount>	Exception	Head of TR; CFO; CHRO
STI payout above 150% of target	Exception	CFO; CHRO
Off-cycle equity grant	Exception	Head of TR; CFO; CHRO; Board Committee (as applicable)

Exception Process

1. Submit exception request in <System Name> with business rationale, internal equity analysis, and market data.
2. HRBP reviews and attaches supporting documentation.
3. TR COE validates alignment with philosophy and ranges; recommends action.
4. Finance assesses budget impact; Legal reviews compliance if needed.
5. Approvers per matrix provide electronic approvals.
6. HRIS and Payroll process upon receipt of approvals; records retained per policy.

Annual Cycle Governance and Timeline

1. Q1: Confirm budget, update market data, refresh structures, obtain CFO/CHRO approvals.
2. Q2: Configure systems, publish manager guidelines, run calibration training.
3. Q3: Launch performance reviews, run comp planning, conduct calibrations.
4. Q4: Finalize payouts and increases, load to payroll, issue employee letters, complete accruals.

Vendor Management and Procurement

• Due diligence: Evaluate <Vendor Name> candidates on cost, capability, security, and compliance; require SOC2 or equivalent.
• Contracts: Include SLAs, data protection addendum, audit rights, breach notification within <Number> hours.
• Performance: Quarterly business reviews; KPI thresholds (e.g., 99.9% uptime, <Percentage>% SLA adherence).
• Termination: Offboarding plan, data return or destruction within <Number> days.

Compliance and Audit

• Legal compliance: Monitor changes in pay transparency, minimum wage, working time, equal pay, and benefits regulations by <Country>.
• Internal audits:
  • Annual compensation process audit by Internal Audit.
  • Quarterly sample reviews of offers, promotions, and exceptions.
  • Benefits plan compliance testing per local requirements.
• Corrective actions: Document issues, remediation plans, owners, and due dates; report to CHRO and Audit Committee.

Risk Management and Controls

• Key risks: Budget overrun, pay inequity, data breaches, non-compliance, fraud, and reputational harm.
• Controls:
  • Segregation of duties between requestors, approvers, and processors.
  • System-enforced eligibility and range checks.
  • Dual approval for high-risk actions.
  • Mandatory training for managers on pay decisions and bias mitigation.
• Monitoring: Monthly exception reports; semi-annual equity pay reviews; annual vendor risk assessments.

Implementation Guidelines

• Change governance: Material changes require impact analysis, cost modeling, and stakeholder sign-off.
• Pilot and phased rollout: Pilot in <Country/Business Unit> before global rollout; gather feedback and adjust.
• Systems readiness: Build and test in <System Name>; parallel payroll run for first cycle after change.
• Documentation: Maintain program documents, FAQs, and manager guides in <Intranet Site>.
• Training: Mandatory e-learning for managers prior to compensation cycles; completion rate target > <Percentage>% by <Date>.

Review and Approval Process

• Review cadence: Annual comprehensive review; interim updates as required by law or business need.
• Approvals:
  • Policy updates: Head of TR, CHRO, CFO, and Legal.
  • Plan documents: CHRO and CFO; Board HR/Comp Committee where required.
  • Local addenda: Head of TR and local Legal.
• Effective dates: Changes generally effective on <Date> unless otherwise specified in plan documents.
• Communication: Notice to employees at least <Number> days prior to effective date, subject to legal requirements.

Metrics and Reporting

• Pay distribution metrics: Compa-ratio distribution by grade and gender; penetration of ranges.
• Performance differentiation: Merit and bonus spend by rating category.
• External competitiveness: % of roles at market +/- <Percentage>%.
• Equity health: Burn rate, overhang, share pool runway (in years).
• Turnover: Voluntary turnover by critical role vs. market benchmark.
• Benefits efficiency: Cost trend vs. benchmark and utilization of key programs.
• Compliance: % of actions compliant with approval matrix; audit findings closed on time.
• Reporting frequency: Monthly to ELT; quarterly to Board HR/Comp Committee.

Record Retention

• Policy and plan documents: Retain for <Number> years from end of plan year or as required by law.
• Individual pay decisions and approvals: Retain for <Number> years.
• Vendor contracts and security assessments: Retain for <Number> years post-termination.
• Audit logs and system extracts: Retain for <Number> years; secure archive in <System Name>.

Legal and Compliance Disclaimers

• Nothing in this framework creates a contract of employment or alters at-will employment where applicable.
• Where conflicts arise between this framework and local law, local law prevails. Local addenda govern implementation details in each <Country>.
• Tax consequences vary by individual; employees should consult their own advisors.

Glossary of Terms and Definitions

• TR COE: Total Rewards Center of Excellence responsible for rewards design and governance.
• Compa-ratio: Employee pay divided by range midpoint for the applicable grade.
• Burn rate: Shares granted in a period divided by weighted average shares outstanding.
• Overhang: Unexercised outstanding awards plus available shares divided by shares outstanding.
• IBNR: Incurred but not reported benefits liability estimate.
• OTE: On-target earnings for sales roles (base plus target variable).
• PSU: Performance Share Unit, equity vehicle with performance-based vesting.
• RSU: Restricted Stock Unit, time-based vesting.
• Range penetration: Position of employee pay within range from minimum to maximum.
• Shadow payroll: Reporting of hypothetical or actual compensation in host/home countries for mobile employees.
• Clawback: Employer right to recover compensation under specified conditions.

Country and Business Unit Addenda

• Local addenda must specify statutory requirements, market practices, and deviations from global policy for <Country> or <Business Unit>.
• Deviations require justification, cost analysis, and approvals per this framework.

Appendices

Appendix A: Sample Manager Checklist for Offers

1. Confirm job level and grade using job architecture.
2. Validate market data and internal equity comparators.
3. Select offer within range; if above midpoint, capture justification.
4. Route for approvals per matrix in <System Name>.
5. Generate offer letter and required disclosures for <Country>.
6. Coordinate start date and onboarding tasks.

Appendix B: Sample Calibration Agenda

1. Review distribution of performance ratings vs. guidelines.
2. Analyze pay equity by gender and underrepresented groups.
3. Validate alignment of high awards with business impact.
4. Document adjustments and finalize decisions.

Employee and Manager Communication Guide

Welcome to <Company Name>’s Total Rewards overview. This guide explains how your pay, incentives, benefits, and time-off work together to support your wellbeing and recognize your contribution.

What you earn includes several parts. Your base pay is the fixed amount you receive each pay period. It is reviewed regularly against the market and your performance. Most roles have a salary range that shows the typical pay from minimum to maximum for the job. Being within the range does not guarantee any specific increase, but it helps us keep pay fair and competitive.

Many employees are eligible for an annual bonus. Your bonus is tied to how <Company Name> performs, how your team performs, and how you personally perform against goals. We set a target as a percentage of your base pay, then adjust up or down based on results. If the company does not meet minimum performance thresholds, bonuses may be reduced or not paid. We share the results each year so you understand how payouts are determined.

Some roles also receive long-term incentives, such as restricted stock units or performance-based awards. These are designed to reward sustained results over time. They typically vest over several years and are subject to company policies and local tax rules. We will always tell you the details of any grant you receive and what to expect at vesting.

Benefits are an important part of your total rewards. Depending on your location, you may have medical, life and disability coverage, retirement plans, paid time off, and wellbeing programs. We balance affordability with high-quality coverage. You will receive plan details during enrollment and can find information any time on <Intranet Site>.

Time off helps you recharge. You accrue paid time off according to your role and years of service, plus company holidays that reflect local practices in your <Country>. Some locations have specific rules for carryover or payout at termination. Your local guide explains these differences.

We aim to recognize great work promptly and fairly. Managers can grant spot recognition for exceptional contributions and nominate you for quarterly awards. Recognition may be taxable depending on your location, and we will handle any payroll reporting required.

Here is what you can expect during our annual rewards cycle:

1. Early in the year, we confirm budgets and update salary ranges based on market data.
2. Mid-year, you and your manager align on goals and discuss progress.
3. Toward year-end, performance reviews happen. Managers make pay and bonus recommendations using clear guidelines.
4. After approvals, we share your pay and bonus decisions with you, along with a personalized letter in <System Name>.

We want your pay to be fair. We regularly review pay across similar roles and take action if we see gaps that are not explained by job-related factors. If you have a question or concern about your pay, talk to your manager or HRBP, or contact the HR Service Center at <Email/Portal>.

Protecting your personal information matters. Only authorized people can access your data, and we use secure systems to manage your information. If you move countries or receive equity, we will guide you through any additional steps or tax requirements.

Sometimes we need to make changes to our programs. When that happens, we provide clear, timely updates and explain what it means for you. We also maintain country-specific guides to reflect local laws and practices. If there is a difference between this overview and a specific plan document or local policy, the plan or local policy rules.

Your manager is here to help you navigate your rewards. Before making pay decisions, managers receive training and tools to support meaningful, unbiased conversations. If you are a manager, you will have access to ranges, guidelines, and a planning tool in <System Name> to help you make informed, equitable decisions.

Thank you for the work you do at <Company Name>. Our Total Rewards are designed to support your growth, recognize your impact, and provide flexibility for what matters most to you and your family. For more information, visit <Intranet Site> or contact <HR Service Center>.

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Document Information:

• Document Type: Total Rewards Governance Framework
• Category: Compliance & Governance
• Generated: August 28, 2025
• Status: Sample Template
• Next Review: <Insert Review Date>

Usage Instructions:

1. Replace all text in angle brackets < > with your company-specific information
2. Review all sections for applicability to your organization
3. Customize content to reflect your company's policies and local regulations
4. Have legal and HR leadership review before implementation
5. Update document header with your company's version control information
6. At bottom of the document you find a short example on how the content could be communicated to end-users, for instance employees.

This sample document is provided for reference only and should be customized to meet your organization's specific needs and local legal requirements.