First Data 2007 Annual Report Download - page 163

We believe that reasonable and appropriate severance and change in control benefits are necessary in order to be competitive in the Company's executive
attraction and retention efforts. The Company's severance benefits are equivalent to those typically found in other companies and reflect the fact that it may be
difficult for such executives to find comparable employment within a short period of time. We also believe that these types of agreements are appropriate and
customary in situations such as the merger where executives have made significant personal investments in the Company which are generally not liquid for a
significant period of time. Information regarding applicable payments under such agreements for the named executive officers is provided under "Potential
Payments Upon Termination or Change in Control."
In July 2005, First Data established the First Data Corporation Severance/Change in Control Policy (the "Policy"). The Policy provides for the payment of
benefits to executive officers upon severance from First Data and/or upon a change of control. Following the merger, the Policy was updated and restated to
better align with the provisions and definitions in the 2007 Equity Plan in which all executive officers participate.
The Policy is intended to promote uniform treatment of senior executives who are involuntarily terminated other than for "cause" or who voluntarily leave the
company for "good reason" as defined under the 2007 Equity Plan. Under the updated Policy, no benefits are provided based solely on a "Change-in-Control".
The Policy provides for payment of the following severance benefits:
(i) A cash payment equal to the executive officer's base pay plus target bonus multiplied by 2. The updated Policy no longer provides greater
benefits for the CEO.
(ii) A cash payment equal to the executive officer's prorated bonus target for the year of termination.
(iii) A cash payment equal to the financial planning benefits to which the executive officer would have been entitled to during the two years following
termination.
(iv) Continuation of medical, dental and vision benefits coverage for a period of 2 years, with a portion of the costs of the benefits paid by the
executive officer.
(v) A "Gross Up Payment" is made if it is determined that any Section 280G parachute payments provided by the Company to or on behalf of an
eligible executive would be subject to the excise tax imposed by Code Section 4999. The Gross-Up Payment is an amount so that after payment
of all taxes the eligible executive retains an amount equal to the Excise Tax imposed by Code Section 4999. Executives are eligible for this
benefit regardless of whether their employment is terminated following the triggering change-in-control.
As a condition to receiving severance benefits under the Policy, all employees are required to release First Data and its employees from all claims they may
have against them and agree to a number of restrictive covenants which are structured to protect First Data from potential loss of customers or employees and
the release of company confidential information.
During 2007, several named executive officers became entitled to severance benefits under this policy, including Mr. Bailis, Mr. Dibble and Ms. Patsley. The
amount and nature of these benefits are described in detail in the compensation tables and footnotes. Also in 2007, Mr. Boucher received a Gross Up Payment
under the plan. This payment was made to cover the Section 4999 excise tax incurred by Mr. Boucher as a result of the accelerated vesting of his equity at the
time of the merger.
OTHER BENEFIT PLANS
All executive officers also are eligible to participate in the employee benefit plans and programs generally available to First Data's employees, including
participation in First Data's matching gift program and coverage under First Data's medical, dental, life and disability insurance plans.
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