Western Union 2012 Annual Report Download - page 133

Download and view the complete annual report

Please find page 133 of the 2012 Western Union annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 158

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158

THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
128
16. Stock Compensation Plans
Stock Compensation Plans
The Western Union Company 2006 Long-Term Incentive Plan
The Western Union Company 2006 Long-Term Incentive Plan (“2006 LTIP”) provides for the granting of stock options,
restricted stock units, unrestricted stock awards and other equity-based awards to employees who perform services for the Company.
A maximum of 120.0 million shares of common stock may be awarded under the 2006 LTIP, of which 35.0 million shares are
available as of December 31, 2012.
Options granted under the 2006 LTIP are issued with exercise prices equal to the fair market value of Western Union common
stock on the grant date, have 10-year terms, and typically vest over four equal annual increments beginning 12 months after the
date of grant, with the exception of options granted to retirement eligible employees, which will vest on a prorated basis, upon
termination. Compensation expense related to stock options is recognized over the requisite service period.
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, upon termination. 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.
The compensation committee of the Company's Board of Directors has also granted the Company's executives and other key
employees long-term incentive awards under the 2006 LTIP which consist 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. For the 2012
awards, achievement is also limited if certain total shareholder return metrics are not met over the three year vesting 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, the compensation
committee granted non-executive employees of the Company participating in the 2006 LTIP 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.
In 2012, the Company started granting bonus stock units out of the 2006 LTIP to the non-employee directors of the Company.
Since bonus stock units vest immediately, compensation expense is recognized on the date of grant based on the fair value of the
awards when granted. These awards may be settled immediately unless the participant elects to defer the receipt of common shares
under the applicable plan rules.
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, 2012, the Company has awarded 1.1 million
options and 0.3 million unrestricted stock units to non-employee directors of the Company.