Western Union 2011 Annual Report Download - page 143

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THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Restricted stock awards and units granted under the 2006 LTIP typically become 100% vested on the three
year anniversary of the grant date, with the exception of restricted stock units granted to retirement eligible
employees, which will vest on a prorated basis. 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 2011, the compensation committee of the Company’s Board of Directors granted the Company’s executives
and other key employees, long-term incentive awards under the 2006 LTIP which consisted of two-thirds
performance based restricted stock unit awards and one-third stock option awards. The performance based
restricted stock units are restricted stock awards. The grant date fair value is fixed and the amount of restricted
stock units depends upon certain financial and strategic performance objectives being met over a two-year period
plus an additional one-year vesting period after the two-year performance period. The actual number of
performance based restricted stock units that the recipients receive ranges from 0% to 300% of the target number
of stock units granted under the LTIP based on the achievement of the performance objectives. Additionally, in
2011, non-executive employees of the Company participating in the 2006 LTIP received annual equity grants of
two-thirds restricted stock units and one-third stock option awards, or all restricted stock units depending on their
employment grade level.
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 market 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, 2011, the
Company has awarded 1.0 million options and 0.3 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, all of these
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