You chose:

4. Confront the manager and insist that it's his problem not yours. His tolerance could only encourage the unethical behaviour of the salespersons. If this practice continues, it could lead to other unethical behaviour, damage the image of the firm with its clients, and create an unhealthy atmosphere within the Sales Department. To back up your position, you admit that you are the granddaughter of the owners.

You are approaching the manager a second time and now also challenging his authority and confronting him with your hidden identity. He will consider it underhanded and unethical on your part that you did not reveal this earlier. He is very unlikely to be cooperative and will likely register a strong objection to your grandparents and possibly consider resigning his position. Regarding the padding, he will claim that it is a relatively harmless practice that keeps the sales force motivated.