Disciplinary Dilemmas

During an interactive Virtual Conference we asked the question, “Is it possible to discipline employees and NOT have them leave?”
https://jjkellercompliancenetwork.com/news/virtual-conference-participants-share-employee-discipline-wins-and-woes

Attendees discussed three questions, and one tricky situation:
Scenario: Your top salesperson (who is also the CEO’s brother-in-law) ignores the dress code, smokes in the office (which is prohibited), and doesn’t log his sales according to procedures other salespeople must follow. How do you go about disciplining this employee?
The group mentioned going to the CEO or leadership to talk about the situation, and stress what could happen if the employee does not follow company policies. Make sure the people at the top understand what this employee’s actions are costing the company, an attendee added. Timing was also stressed by a participant who said it is best to act as soon as possible and not put it off, otherwise the employee will keep pushing and things will get worse.

What would you do?