First Data 2007 Annual Report Download - page 160

• rewarding executives for long-term commitment and the creation of value over the long-term;
• motivating executives by means of growth-related incentives tied to achievement of long range goals; and
• aligning the interests of the Company's executives with those of the Company's shareholders.
The 2007 Equity Plan allows executives to invest in the Company by purchasing shares of restricted common stock. Purchased shares are then matched with
stock options. In January 2008, the Committee approved option grants to NEOs who purchased shares of restricted stock.
Half of the options granted have time-based vesting, whereby 20% of the options vest on each of the first five anniversaries of the merger date. The other half
of the options granted are subject to EBITDA-based performance vesting. Performance-vested options are eligible to vest and become exercisable in equal
increments of 20% at the end of fiscal years 2008, 2009, 2010, 2011 and 2012, but will vest on those dates only if First Data attains specified annual EBITDA
performance targets, as determined in good faith by the Committee.
All performance-vested options granted also vest and become exercisable on a "catch up" basis if at the end of fiscal years 2009, 2010, 2011 or 2012, the
cumulative total EBITDA earned in all prior completed fiscal years exceeds the cumulative total of all EBITDA targets in effect for such years. Due to the
sensitivity of the Company's future business plans, we are not disclosing the specific EBITDA performance targets for each year.
Vesting of time options is fully accelerated upon a Change in Control or a Liquidity Event, as defined in the 2007 Equity Plan. Vesting of performance
options is fully accelerated upon a Change in Control or a Liquidity Event only if one of the following conditions is also met: (a) the Sponsor IRR (as defined
in the 2007 Equity Plan) is achieved, or (b) the Sponsor Return (as defined in the 2007 Equity Plan) is achieved.
All options granted are also subject to call rights by the Company for a period of five years following the merger date if an option holder terminates
employment with First Data for any reason. If an option holder's employment is terminated due to Death, Disability, Good Reason or Not for Cause (as
defined in the 2007 Equity Plan), call rights may be exercised on vested options at the fair market value share price. In this event, shares obtained through
previous option exercises may be called at the fair market value share price. If the option holder's employment is terminated voluntarily or for Cause (as
defined in the 2007 Equity Plan), call rights may be exercised at the lesser of the fair market value share price or the option exercise price. In this event, shares
obtained through previous option exercises may be called at the lesser of the fair market value share price or the option exercise price. These provisions
enhance the retention of executives who participate in the 2007 Equity Plan and incent these executives to create long-term and sustainable value.
The Committee believes that requiring executive officers to make a personal investment in company stock, in addition to providing a significant one-time
grant of stock options which are subject to a long vesting period and half of which are also subject to performance-based vesting, is an extremely effective
design for generating maximum levels of motivation within First Data's executive team and alignment between the executive team and company shareholders.
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