Western Union 2010 Annual Report Download - page 120

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Restricted stock awards and units granted under the 2006 LTIP typically become 100% vested on the three year
anniversary of the grant date. The fair value of the awards granted is measured based on the fair value of the shares
on the date of grant. Certain share unit grants do not provide for the payment of dividend equivalents. For those
grants, the value of the grants is reduced by the net present value of the foregone dividend equivalent payments. The
related compensation expense is recognized over the requisite service period which is the same as the vesting
period.
In February 2009, the Compensation Committee of the Company’s board of directors granted the Company’s
executives long-term incentive awards under the 2006 LTIP which consisted of one-third restricted stock units, one-
third stock option awards and one-third performance-based cash awards. The performance-based cash awards are
based on strategic performance objectives for 2009 and 2010 and are payable in equal installments on the second
and third anniversaries of the award, assuming the applicable performance objectives are satisfied. Based on their
contributions to the Company and additional assumed responsibilities, certain executives received an incremental
grant of restricted stock units which fully vest on the fourth anniversary of the grant date. Additionally, non-
executive employees of the Company participating in the 2006 LTIP received annual equity grants of 50% stock
option awards and 50% restricted stock units.
The Western Union Company 2006 Non-Employee Director Equity Compensation Plan
The Western Union Company 2006 Non-Employee Director Equity Compensation Plan (“2006 Director Plan”)
provides for the granting of equity-based awards to non-employee directors of the Company. Options granted under
the 2006 Director Plan are issued with exercise prices equal to the fair value of Western Union common stock at the
grant date, have 10-year terms, and vest immediately. Since options and deferred stock units under this plan vest
immediately, compensation expense is recognized on the date of grant based on the fair value of the awards when
granted. Awards under the plan may be settled immediately unless the participant elects to defer the receipt of the
common shares under applicable plan rules. A maximum of 1.5 million shares of common stock may be awarded
under the 2006 Director Plan. As of December 31, 2010, the Company has issued 0.7 million options and 0.2 million
unrestricted stock units to non-employee directors of the Company.
Impact of Spin-Off to Stock—Based Awards Granted Under First Data Plans
At the time of the Spin-off, First Data converted stock options, restricted stock awards and restricted stock units
(collectively, “Stock-Based Awards”) of First Data stock held by Western Union and First Data employees. For
Western Union employees, each outstanding First Data Stock-Based Award was converted to new Western Union
Stock-Based Awards. For First Data employees, each outstanding First Data Stock-Based Award held prior to the
Spin-off was converted into one replacement First Data Stock-Based Award and one Western Union Stock-Based
Award. The new Western Union and First Data Stock-Based Awards maintained their pre-conversion aggregate
intrinsic values, and, in the case of stock options, their ratio of the exercise price per share to their fair value per
share.
All converted Stock-Based Awards, which had not vested prior to September 24, 2007, were subject to the terms
and conditions applicable to the original First Data Stock-Based Awards, including change of control provisions
which required full vesting upon a change of control of First Data. Accordingly, upon the completion of the
acquisition of First Data on September 24, 2007 by an affiliate of Kohlberg Kravis Roberts & Co.’s (“KKR”), all of
these remaining converted unvested Western Union Stock-Based Awards vested. As a result of this accelerated
vesting, there is no remaining unamortized compensation expense associated with such converted Stock-Based
Awards.
After the Spin-off, the Company receives all cash proceeds related to the exercise of all Western Union stock
options, recognizes all stock compensation expense and retains the resulting tax benefits relating to Western Union
awards held by Western Union employees. First Data recognizes all stock-based compensation expense and retains
all associated tax benefits for Western Union Stock-Based Awards held by First Data employees.
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