<?xml version="1.0" encoding="us-ascii"?><InstanceReport xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance" xmlns:xsd="http://www.w3.org/2001/XMLSchema"><Version>2.2.0.25</Version><hasSegments>false</hasSegments><hasScenarios>false</hasScenarios><ReportLongName>16 - Disclosure - COMPENSATION PLANS</ReportLongName><DisplayLabelColumn>true</DisplayLabelColumn><ShowElementNames>false</ShowElementNames><RoundingOption /><HasEmbeddedReports>false</HasEmbeddedReports><Columns><Column><Id>1</Id><IsAbstractGroupTitle>false</IsAbstractGroupTitle><LabelColumn>false</LabelColumn><CurrencyCode>USD</CurrencyCode><FootnoteIndexer /><hasSegments>false</hasSegments><hasScenarios>false</hasScenarios><MCU><KeyName>1/1/2011 - 4/2/2011
USD ($)

USD ($) / shares

</KeyName><CurrencySymbol>$</CurrencySymbol><contextRef><ContextID>Context_3ME_02-Apr-2011</ContextID><EntitySchema>http://www.sec.gov/CIK</EntitySchema><EntityValue>0000095029</EntityValue><PeriodDisplayName /><PeriodType>duration</PeriodType><PeriodStartDate>2011-01-01T00:00:00</PeriodStartDate><PeriodEndDate>2011-04-02T00:00:00</PeriodEndDate><Segments /><Scenarios /></contextRef><UPS><UnitProperty><UnitID>USD</UnitID><UnitType>Standard</UnitType><StandardMeasure><MeasureSchema>http://www.xbrl.org/2003/iso4217</MeasureSchema><MeasureValue>USD</MeasureValue><MeasureNamespace>iso4217</MeasureNamespace></StandardMeasure><Scale>0</Scale></UnitProperty><UnitProperty><UnitID>USDEPS</UnitID><UnitType>Divide</UnitType><NumeratorMeasure><MeasureSchema>http://www.xbrl.org/2003/iso4217</MeasureSchema><MeasureValue>USD</MeasureValue><MeasureNamespace>iso4217</MeasureNamespace></NumeratorMeasure><DenominatorMeasure><MeasureSchema>http://www.xbrl.org/2003/instance</MeasureSchema><MeasureValue>shares</MeasureValue><MeasureNamespace>xbrli</MeasureNamespace></DenominatorMeasure><Scale>0</Scale></UnitProperty><UnitProperty><UnitID>Shares</UnitID><UnitType>Standard</UnitType><StandardMeasure><MeasureSchema>http://www.xbrl.org/2003/instance</MeasureSchema><MeasureValue>shares</MeasureValue><MeasureNamespace>xbrli</MeasureNamespace></StandardMeasure><Scale>0</Scale></UnitProperty></UPS><CurrencyCode>USD</CurrencyCode><OriginalCurrencyCode>USD</OriginalCurrencyCode></MCU><CurrencySymbol>$</CurrencySymbol><Labels><Label Id="1" Label="3 Months Ended" /><Label Id="2" Label="Apr. 02, 2011" /></Labels></Column></Columns><Rows><Row><Id>2</Id><IsAbstractGroupTitle>true</IsAbstractGroupTitle><Level>0</Level><ElementName>rgr_DisclosureOfCompensationRelatedCostsShareBasedPaymentsAbstract</ElementName><ElementPrefix>rgr</ElementPrefix><IsBaseElement>false</IsBaseElement><BalanceType>na</BalanceType><PeriodType>duration</PeriodType><ShortDefinition>No definition available.</ShortDefinition><IsReportTitle>false</IsReportTitle><IsSegmentTitle>false</IsSegmentTitle><IsSubReportEnd>false</IsSubReportEnd><IsCalendarTitle>false</IsCalendarTitle><IsTuple>false</IsTuple><IsEquityPrevioslyReportedAsRow>false</IsEquityPrevioslyReportedAsRow><IsEquityAdjustmentRow>false</IsEquityAdjustmentRow><IsBeginningBalance>false</IsBeginningBalance><IsEndingBalance>false</IsEndingBalance><IsReverseSign>false</IsReverseSign><PreferredLabelRole /><FootnoteIndexer /><Cells><Cell><Id>1</Id><IsNumeric>false</IsNumeric><IsRatio>false</IsRatio><DisplayZeroAsNone>false</DisplayZeroAsNone><NumericAmount>0</NumericAmount><RoundedNumericAmount>0</RoundedNumericAmount><NonNumbericText /><NonNumericTextHeader /><FootnoteIndexer /><CurrencyCode /><CurrencySymbol /><IsIndependantCurrency>false</IsIndependantCurrency><ShowCurrencySymbol>false</ShowCurrencySymbol><DisplayDateInUSFormat>false</DisplayDateInUSFormat><hasSegments>false</hasSegments><hasScenarios>false</hasScenarios></Cell></Cells><OriginalInstanceReportColumns /><Unit>Other</Unit><ElementDataType>xbrli:stringItemType</ElementDataType><SimpleDataType>string</SimpleDataType><ElementDefenition>No definition available.</ElementDefenition><IsTotalLabel>false</IsTotalLabel><IsEPS>false</IsEPS><Label>Disclosure Of Compensation Related Costs Share-based Payments [Abstract]</Label></Row><Row><Id>3</Id><IsAbstractGroupTitle>false</IsAbstractGroupTitle><Level>0</Level><ElementName>us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock</ElementName><ElementPrefix>us-gaap</ElementPrefix><IsBaseElement>true</IsBaseElement><BalanceType>na</BalanceType><PeriodType>duration</PeriodType><ShortDefinition>No definition available.</ShortDefinition><IsReportTitle>false</IsReportTitle><IsSegmentTitle>false</IsSegmentTitle><IsSubReportEnd>false</IsSubReportEnd><IsCalendarTitle>false</IsCalendarTitle><IsTuple>false</IsTuple><IsEquityPrevioslyReportedAsRow>false</IsEquityPrevioslyReportedAsRow><IsEquityAdjustmentRow>false</IsEquityAdjustmentRow><IsBeginningBalance>false</IsBeginningBalance><IsEndingBalance>false</IsEndingBalance><IsReverseSign>false</IsReverseSign><PreferredLabelRole>verboselabel</PreferredLabelRole><FootnoteIndexer /><Cells><Cell><Id>1</Id><IsNumeric>false</IsNumeric><IsRatio>false</IsRatio><DisplayZeroAsNone>false</DisplayZeroAsNone><NumericAmount>0</NumericAmount><RoundedNumericAmount>0</RoundedNumericAmount><NonNumbericText>&lt;p style="font-style:times new roman;font-size:10pt;text-align:left;"&gt;NOTE 9 - COMPENSATION PLANS&lt;/p&gt;
&lt;p style="font-style:times new roman;font-size:10pt;text-align:left; text-indent:25px;"&gt;In April 2007, the Company adopted and the shareholders approved the 2007 Stock Incentive Plan (the "2007 SIP") under which employees, independent contractors, and non-employee directors may be granted stock options, restricted stock, deferred stock awards, and stock appreciation rights, any of which may or may not require the satisfaction of performance objectives. Vesting requirements are determined by the Compensation Committee or the Board of Directors. The Company has reserved 2,550,000 shares for issuance under the 2007 SIP of which 1,201,150 remain available for future grants as of April 2, 2011.&lt;/p&gt;
&lt;p style="font-style:times new roman;font-size:10pt;text-align:left; text-indent:25px;"&gt;Compensation costs related to all share-based payments recognized in the statements of operations aggregated $0.5 million and $0.6 million for the three months ended April 2, 2011 and April 3, 2010, respectively.&lt;/p&gt;
&lt;p style="font-style:times new roman;font-size:10pt;text-align:left;"&gt;&lt;u&gt;Stock Options &lt;/u&gt;&lt;/p&gt;
&lt;p style="font-style:times new roman;font-size:10pt;text-align:left; text-indent:25px;"&gt;A summary of changes in options outstanding under the plans is summarized below:&lt;/p&gt;
&lt;table align="center" cellspacing="0" border="0" width="100%"&gt;
&lt;tr&gt;
&lt;td style="vertical-align:top; border-top:1px solid black;border-bottom:1px solid black; border-right:1px solid black;"&gt;
&lt;p style="font-style:times new roman;font-size:10pt;text-align:left; text-indent:25px;"&gt;&amp;#160;&lt;/p&gt;
	&lt;/td&gt;
	&lt;td style="vertical-align:bottom; border-top:1px solid black;border-bottom:1px solid black; border-right:1px solid black;"&gt;
&lt;p style="font-style:times new roman;font-size:10pt;text-align:center;"&gt;Shares&lt;/p&gt;
	&lt;/td&gt;
	&lt;td colspan="2" style="vertical-align:bottom; border-top:1px solid black;border-bottom:1px solid black; border-right:1px solid black;"&gt;
&lt;p style="font-style:times new roman;font-size:10pt;text-align:center;"&gt;Weighted Average Exercise Price&lt;/p&gt;
	&lt;/td&gt;
	&lt;td colspan="2" style="vertical-align:bottom; border-top:1px solid black;border-bottom:1px solid black; border-right:1px solid black;"&gt;
&lt;p style="font-style:times new roman;font-size:10pt;text-align:center;"&gt;Grant Date Fair Value&lt;/p&gt;
	&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
	&lt;td width="55%" style="vertical-align:top; border-right:1px solid black;"&gt;
&lt;p style="font-style:times new roman;font-size:10pt;text-align:left;"&gt;Outstanding at December 31, 2010&lt;/p&gt;
	&lt;/td&gt;
	&lt;td width="15%" style="vertical-align:top; border-right:1px solid black;"&gt;
&lt;p style="font-style:times new roman;font-size:10pt;text-align:right; margin-right:5px;"&gt;1,172,150&lt;/p&gt;
	&lt;/td&gt;
	&lt;td width="5%" style="vertical-align:bottom;text-align:right;font-style:times new roman;font-size:10pt;"&gt;$&lt;/td&gt;&lt;td width="10%" style="vertical-align:top; border-right:1px solid black;"&gt;
&lt;p style="font-style:times new roman;font-size:10pt;text-align:center;"&gt;9.30&lt;/p&gt;
	&lt;/td&gt;
	&lt;td width="5%" style="vertical-align:bottom;text-align:right;font-style:times new roman;font-size:10pt;"&gt;$&lt;/td&gt;&lt;td width="10%" style="vertical-align:top; border-right:1px solid black;"&gt;
&lt;p style="font-style:times new roman;font-size:10pt;text-align:center;"&gt;4.46&lt;/p&gt;
	&lt;/td&gt;
&lt;/tr&gt;
&lt;tr style="background-color:#c0c0c0;"&gt;
	&lt;td style="vertical-align:top; border-right:1px solid black;"&gt;
&lt;p style="font-style:times new roman;font-size:10pt;text-align:left;"&gt;Granted&lt;/p&gt;
	&lt;/td&gt;
	&lt;td style="vertical-align:top; border-right:1px solid black;"&gt;
&lt;p style="font-style:times new roman;font-size:10pt;text-align:right; margin-right:15px;"&gt;-&lt;/p&gt;
	&lt;/td&gt;
	&lt;td colspan="2" style="vertical-align:top; border-right:1px solid black;"&gt;
&lt;p style="font-style:times new roman;font-size:10pt;text-align:right; margin-right:55px;"&gt;-&lt;/p&gt;
	&lt;/td&gt;
	&lt;td colspan="2" style="vertical-align:top; border-right:1px solid black;"&gt;
&lt;p style="font-style:times new roman;font-size:10pt;text-align:right; margin-right:55px;"&gt;-&lt;/p&gt;
	&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
	&lt;td style="vertical-align:top; border-right:1px solid black;"&gt;
&lt;p style="font-style:times new roman;font-size:10pt;text-align:left;"&gt;Exercised&lt;/p&gt;
	&lt;/td&gt;
	&lt;td style="vertical-align:top; border-right:1px solid black;"&gt;
&lt;p style="font-style:times new roman;font-size:10pt;text-align:right; margin-left:0px;"&gt;(319,346)&lt;/p&gt;
	&lt;/td&gt;
	&lt;td style="vertical-align:bottom;text-align:right;font-style:times new roman;font-size:10pt;"&gt;$&lt;/td&gt;&lt;td style="vertical-align:top; border-right:1px solid black;"&gt;
&lt;p style="font-style:times new roman;font-size:10pt;text-align:center;"&gt;8.78&lt;/p&gt;
	&lt;/td&gt;
	&lt;td style="vertical-align:bottom;text-align:right;font-style:times new roman;font-size:10pt;"&gt;$&lt;/td&gt;&lt;td style="vertical-align:top; border-right:1px solid black;"&gt;
&lt;p style="font-style:times new roman;font-size:10pt;text-align:center;"&gt;4.21&lt;/p&gt;
	&lt;/td&gt;
&lt;/tr&gt;
&lt;tr style="background-color:#c0c0c0;"&gt;
	&lt;td style="vertical-align:top; border-bottom:1px solid black; border-right:1px solid black;"&gt;
&lt;p style="font-style:times new roman;font-size:10pt;text-align:left;"&gt;Expired&lt;/p&gt;
	&lt;/td&gt;
	&lt;td style="vertical-align:top; border-bottom:1px solid black; border-right:1px solid black;"&gt;
&lt;p style="font-style:times new roman;font-size:10pt;text-align:right;margin-right:15px;"&gt;-&lt;/p&gt;
	&lt;/td&gt;
	&lt;td colspan="2" style="vertical-align:top; border-bottom:1px solid black; border-right:1px solid black;"&gt;
&lt;p style="font-style:times new roman;font-size:10pt;text-align:right;margin-right:55px;"&gt;-&lt;/p&gt;
	&lt;/td&gt;
	&lt;td colspan="2" style="vertical-align:top; border-bottom:1px solid black; border-right:1px solid black;"&gt;
&lt;p style="font-style:times new roman;font-size:10pt;text-align:right;margin-right:55px;"&gt;-&lt;/p&gt;
	&lt;/td&gt;
&lt;/tr&gt;
&lt;tr&gt;
	&lt;td style="vertical-align:top; border-bottom:1px solid black; border-right:1px solid black;"&gt;
&lt;p style="font-style:times new roman;font-size:10pt;text-align:left;"&gt;Outstanding at April 2, 2011&lt;/p&gt;
	&lt;/td&gt;
	&lt;td style="vertical-align:top; border-bottom:1px solid black; border-right:1px solid black;"&gt;
&lt;p style="font-style:times new roman;font-size:10pt;text-align:right; margin-right:5px;"&gt;852,804&lt;/p&gt;
	&lt;/td&gt;
	&lt;td style="vertical-align:bottom;text-align:right;border-bottom:1px solid black;font-style:times new roman;font-size:10pt;"&gt;$&lt;/td&gt;&lt;td style="vertical-align:top; border-bottom:1px solid black; border-right:1px solid black;"&gt;
&lt;p style="font-style:times new roman;font-size:10pt;text-align:center;"&gt;9.50&lt;/p&gt;
	&lt;/td&gt;
	&lt;td style="vertical-align:bottom;text-align:right;border-bottom:1px solid black;font-style:times new roman;font-size:10pt;"&gt;$&lt;/td&gt;&lt;td style="vertical-align:top; border-bottom:1px solid black; border-right:1px solid black;"&gt;
&lt;p style="font-style:times new roman;font-size:10pt;text-align:center;"&gt;4.56&lt;/p&gt;
	&lt;/td&gt;
&lt;/tr&gt;
&lt;/table&gt;
&lt;p style="font-style:times new roman;font-size:10pt;text-align:left; text-indent:25px;"&gt;The aggregate intrinsic value (mean market price at April 2, 2011 less the weighted average exercise price) of options outstanding under the plans was approximately $11.7 million.&lt;/p&gt;
&lt;p style="font-style:times new roman;font-size:10pt;text-align:left;"&gt;&lt;u&gt;Restricted Stock Units &lt;/u&gt;&lt;/p&gt;
&lt;p style="font-style:times new roman;font-size:10pt;text-align:left; text-indent:25px;"&gt;Beginning in the second quarter of 2009, the Company began granting restricted stock units to senior employees in lieu of incentive stock options. These awards vest dependent on the achievement of various corporate objectives established by the Compensation Committee of the Board of Directors, and beginning in 2011 have a three year vesting period.&lt;/p&gt;
&lt;p style="font-style:times new roman;font-size:10pt;text-align:left; text-indent:25px;"&gt;Restricted stock units issued during the three months ended April 2, 2011 were 333,850. Compensation costs related to these restricted stock units is $6.0 million. These costs are being recognized ratably over the vesting period of 36 months.  Compensation cost related to restricted stock units was $0.5 million for the three months ended April 2, 2011 and $0.6 million for the three months ended April 3, 2010.&lt;/p&gt;
</NonNumbericText><NonNumericTextHeader>NOTE 9 - COMPENSATION PLANS
In April 2007, the Company adopted and the shareholders approved the 2007 Stock Incentive Plan (the "2007 SIP") under which</NonNumericTextHeader><FootnoteIndexer /><CurrencyCode /><CurrencySymbol /><IsIndependantCurrency>false</IsIndependantCurrency><ShowCurrencySymbol>false</ShowCurrencySymbol><DisplayDateInUSFormat>false</DisplayDateInUSFormat><hasSegments>false</hasSegments><hasScenarios>false</hasScenarios></Cell></Cells><OriginalInstanceReportColumns /><Unit>Other</Unit><ElementDataType>us-types:textBlockItemType</ElementDataType><SimpleDataType>string</SimpleDataType><ElementDefenition>Disclosure of compensation-related costs for share-based compensation which may include disclosure of policies, compensation plan details, allocation of stock compensation, incentive distributions, share-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.</ElementDefenition><ElementReferences>Reference 1: http://www.xbrl.org/2003/role/presentationRef
 -Publisher FASB
 -Name Statement of Financial Accounting Standard (FAS)
 -Number 123R
 -Paragraph 64, 65, A240

Reference 2: http://www.xbrl.org/2003/role/presentationRef
 -Publisher AICPA
 -Name Statement of Position (SOP)
 -Number 93-6
 -Paragraph 53

Reference 3: http://www.xbrl.org/2003/role/presentationRef
 -Publisher SEC
 -Name Staff Accounting Bulletin (SAB)
 -Number Topic 14

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