First Data 2013 Annual Report Download - page 131

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EXECUTIVE SUMMARY
To position the Company for future growth and to advance its focus on operational efficiency and providing solutions that help clients succeed, First
Data Corporation (“FDC”, “First Data” or the “Company”) added several new senior executives in 2013, including a new Chief Executive Officer. These
executives have been installed to help lead a transformation of First Data and drive greater returns. They include Frank J. Bisignano, who was appointed as
the new Chief Executive Officer and a member of the Board of Directors (the “Board”) of First Data on April 28, 2013. Mr. Bisignano has a proven track
record of catalyzing positive change on a global business operating in a dynamic industry. At Citigroup, he built — from the ground up — the largest
transaction services business in the world and oversaw the largest technological and operations businesses in the financial services industry. He is known for
managing technological innovation in customer-focused businesses, and will apply his skills and experience to lead and grow our leadership role in payment
processing globally.
In addition to Mr. Bisignano, the Company recruited Christine Larsen and Himanshu Patel, who were hired as Executive Vice President, Chief
Operations Officer and Executive Vice President, Strategy and Business Development, respectively, on May 23, 2013; and Guy Chiarello who was appointed
President of First Data on July 8, 2013. He has been charged with leading the Company’s strategy and execution for product development, client solutions and
technology.
All of the new executives joining First Data were highly valued and highly compensated individuals with their previous employer. Compensation for
these executives at First Data was set at a level reflecting their established positions and their decisions to forego unvested deferred compensation they would
have otherwise received. These individuals each decided to leave secure employment with a very significant, well-established financial services firm to join
First Data’s efforts to re-position the company for future growth. Their compensation packages were specifically structured to include First Data equity
grants. Stock options represented a significant portion of the new hire compensation package, up to 65% in the case of Mr. Bisignano. The options vest 20%
each year over a period of five years, subject to continued employment in order to align the long-term interests of the executives with those of existing
shareholders. To attract Mr. Chiarello to accept the position of President of the Company, his compensation package was constructed to include a sign-on
bonus to approximate foregone compensation.
We believe our named executive officers are motivated by the potential for appreciation in the stock price, particularly as they will realize the value on
these options only if the stock price increases and the executives remain employed with First Data beyond the date at which the stock options vest. Stock
options give the recipients the right to purchase at a specified price (that is, the fair value of our common stock on the date when the stock option was granted)
a specified number of shares of our common stock for a specified period of time (generally, ten years). Our named executive officers realize value on these
stock options only if our stock price increases (which benefits all stockholders) and the named executive officers remain employed with us beyond the date
that their stock options vest.
Coincident with these appointments, in 2013, the Governance, Compensation and Nominations Committee (the “Committee”) of First Data Corporation
adopted a total compensation philosophy and significantly strengthened the emphasis on equity-based and performance-based pay for its executives and all
employees.
Developments:
On January 11, 2013, Jonathan J. Judge resigned from the role of Chief Executive Officer. On January 28, 2013, FDC announced the appointment of
Edward A. Labry III, 49, as interim Chief Executive Officer of the Company. He served in that capacity until Mr. Bisignano was appointed as Chief
Executive Officer. Mr. Labry then accepted the role of Vice Chairman. On August 21, 2013, the Board of FDC voted to expand the number of directors that
constitute the Board from five to six and elected Joseph J. Plumeri, the former Chairman and Chief Executive Officer of a successful global insurance
brokerage firm, as a director of the Company. He was also appointed as a senior advisor to Kohlberg Kravis Roberts & Co. (“KKR”) and in this capacity
has provided assistance to the Company, specifically in the areas of client delivery, client innovation and marketing.
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