Western Union 2013 Annual Report Download

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MOVING MONEY FOR BETTER
NOTICE OF 2014 ANNUAL MEETING
OF STOCKHOLDERS, PROXY STATEMENT
AND 2013 ANNUAL REPORT
WES TERN UN ION NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS, PROXY STATEMENT AND 2013 ANNUAL REPORT

Table of contents

  • Page 1
    WES TERN UN ION NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS, PROXY STATEMENT AND 2013 ANNUAL REPORT NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS, PROXY STATEMENT AND 2013 ANNUAL REPORT MOVING MONEY FOR BETTER

  • Page 2
    ... moved between consumers 29 transactions per second on average 65% increase in wu.com money transfer transactions* * Compared to a 41% increase in wu.com money transfer transactions in 2012. In 2013 wu.com money transfer transactions represented 3% of The Western Union Company's total revenue.

  • Page 3
    ... getting funds to the people and places that need it most. They are people who prefer using cash to pay their bills. Worldwide, many people have unmet financial service needs. At Western Union, it's our goal to meet those needs-through providing new, innovative solutions. No matter who our customer...

  • Page 4
    ... payments in several countries, including China, India and South Korea. These services contributed to a 7% revenue increase in our Business Solutions segment last year, and allowed us to meet some of the real and growing needs of our customers to better manage their cash flows and foreign-currency...

  • Page 5
    NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT MOVING MONEY FOR BETTER

  • Page 6

  • Page 7
    ...(the "Annual Meeting") of The Western Union Company (the "Company"), to be held at 8:00 a.m., local time, on Friday, May 16, 2014, at 505 Fifth Avenue, 7th Floor, New York, NY 10017. A registration desk will open at 7:30 a.m. The attached notice and Proxy Statement contain details of the business to...

  • Page 8
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  • Page 9
    ... AND PROXY STATEMENT NOTICE IS HEREBY GIVEN that the 2014 Annual Meeting of Stockholders (the "Annual Meeting") of The Western Union Company, a Delaware corporation (the "Company"), will be held at 8:00 a.m., local time, on Friday, May 16, 2014, at 505 Fifth Avenue, 7th Floor, New York, NY...

  • Page 10
    ... ANNUAL MEETING AND VOTING IN PERSON. Please note that all votes cast via telephone or the Internet must be cast prior to 11:59 p.m., Eastern Time on Thursday, May 15, 2014. By Order of the Board of Directors NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT John R. Dye Executive...

  • Page 11
    ... 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT Compensation of Directors ... Report of the Audit Committee ...Compensation and Benefits Committee Report ...Compensation Discussion and Analysis ...Executive Summary...Establishing and Evaluating Executive Compensation ...The Western Union...

  • Page 12
    ... ...Proposal 6-Stockholder Proposal Regarding New Board Committee ...Equity Compensation Plan Information...Stock Beneficially Owned by Directors, Executive Officers and Our Largest Stockholders ...Certain Transactions and Other Matters ...Section 16(a) Beneficial Ownership Reporting Compliance...

  • Page 13
    ..., New York, NY 10017 Record Date: March 20, 2014 NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT Meeting Agenda and Voting Matters Item Management Proposals 1 Election of the Seven Directors Named in this Proxy Statement 2 3 Advisory Vote to Approve Executive Compensation Ratify...

  • Page 14
    ...Number of Members 11 5 4 4 5 PROXY STATEMENT Full Board Audit Committee Compensation and Benefits Committee Corporate Governance and Public Policy Committee Compliance Committee Governance Highlights (Page 15) Number of Meetings Independence During Fiscal Year 2013 91% 8 100% 11 100% 6 100% 9 100...

  • Page 15
    ... pay opportunity vs. current pay. In 2013, all of the long-term incentive awards delivered to our named executive officers were in the form of equity-based compensation and the Senior Executive Annual Incentive Plan (the "Annual Incentive Plan") design included a restricted stock unit component...

  • Page 16
    ...effective March 2012. • No 2012 Chief Executive Officer Bonus: Based on 2012 Company performance, our Chief Executive Officer did not receive a bonus in 2013. • 2 013 Annual Incentive Includes Restricted Stock Unit Component: In 2013, we modified the Company's Annual Incentive Plan design to...

  • Page 17
    ...(3): Cash and All Other Compensation Equity-Based Awards 8.8 7.8 NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT 8 7.9 7.0 6 4.9 CHIEF EXECUTIVE OFFICER 2013 TOTAL DIRECT COMPENSATION 4 5.4 2.4 1.8 2.5 0.5 1.3 2.4 12% 2 0 2011 2012 2013 71% 17% (1) Long-Term Equity...

  • Page 18
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  • Page 19
    ...payment of a nominal fee (which fee will be limited to the expenses we incur in providing you with the requested exhibits). The Company's Annual Report on Form 10-K and these exhibits are also available in the "Investor Relations" section of www.wu.com. NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS...

  • Page 20
    ... Proxy Process and Stockholder Voting WHY DID I RECEIVE THESE MATERIALS? NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT PROXY STATEMENT Our Board of Directors has made these materials available to you on the Internet or, upon your request, has delivered printed versions of these...

  • Page 21
    ...from the broker or agent that holds your shares giving you the right to vote the shares, and you bring such proxy to the Annual Meeting. Shares held in The Western Union Company Incentive Savings Plan- For shares held in The Western Union Company Incentive Savings Plan, that plan's trustee will vote...

  • Page 22
    ... NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT PROXY STATEMENT The Company's By-Laws (the "By-Laws") require directors to be elected by the majority of votes cast with respect to such director in uncontested elections (the number of shares voted "for" a director must exceed the...

  • Page 23
    ..., who are employees of Wells Fargo Bank, N.A., the Company's Transfer Agent and Registrar. If you are a Registered Holder, your telephone or Internet vote is submitted, or your executed Proxy Card is returned, directly to Wells Fargo for tabulation. As noted above, if you hold your shares through...

  • Page 24
    ....com/wu for Registered Holders and at www.proxyvote.com for Beneficial Owners. To access such materials, you will need the control/identification numbers provided to you in your Notice of Internet Availability of Proxy Materials or your Proxy Card. The Western Union Company - Proxy Statement...

  • Page 25
    ...BOARD* Mr. Devitre brings to the Board experience as the chief financial officer of a large United States-based multinational company, as an executive and director of large consumer goods corporations subject to regulation in multiple jurisdictions and as an executive of a financial services company...

  • Page 26
    ...'s term expires in 2015. Age 65 Director Since 2012 EXPERIENCE, QUALIFICATIONS, ATTRIBUTES AND SKILLS SUPPORTING DIRECTORSHIP POSITION ON THE COMPANY'S BOARD* Mr. Goodman brings to the Board experience as the chief financial officer and executive of a large, United States-based global company that...

  • Page 27
    ... experience working with large, global distribution networks, similar to the Company's agent network, and operations, consumer marketing, pricing, and trend analysis. Mr. Greenberg brings to the Board experience as the chief financial officer of a large United States-based multinational company. He...

  • Page 28
    ... banking and financial services. Mr. Mendoza also provides the Board with diversity in viewpoint and international business experience as he has lived and worked and served on a variety of public company boards, both in the United States and abroad. The Western Union Company - Proxy Statement...

  • Page 29
    ...'s largest external constituent groups. Mr. von Schimmelmann has also operated in highly regulated financial services industries in a European jurisdiction. He also provides the viewpoint of a European who has also worked in the United States. 11 | The Western Union Company - Proxy Statement

  • Page 30
    ... of business in a highly regulated industry. Ms. Fragos Townsend also has substantial leadership experience as former chair of the Homeland Security Council and as a former officer in the United States Coast Guard. NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT The Western Union...

  • Page 31
    ... 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT Age 62 Director Since 2012 EXPERIENCE, QUALIFICATIONS, ATTRIBUTES AND SKILLS SUPPORTING DIRECTORSHIP POSITION ON THE COMPANY'S BOARD* Mr. Trujillo is an international business executive with experience as a chief executive officer of global...

  • Page 32
    ... for re-election. Upon the recommendation of the Corporate Governance and Public Policy Committee, the Board of Directors appointed Ms. Fragos Townsend as a director in August 2013, subject to election by the stockholders at the 2014 Annual Meeting. Ms. Fragos Townsend was originally recommended to...

  • Page 33
    ..., Corporate Governance" portion of the Company's website, www.wu.com, or by writing to the attention of: Investor Relations, The Western Union Company, 12500 East Belford Avenue, Mailstop M23IR, Englewood, CO 80112. 15 NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | The Western...

  • Page 34
    ... same time serves or served on that company's compensation committee. PROXY STATEMENT • The director is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to, or received payments from, Western Union for property or services in...

  • Page 35
    ... the Company's compensation practices, including an annual review of the Company's risk assessment of its compensation policies and practices for its employees and the Company's succession planning process. NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT 17 | The Western Union...

  • Page 36
    ... through the "Investor Relations, Corporate Governance" portion of the Company's website, www.wu.com, or by writing to the attention of: Investor Relations, The Western Union Company, 12500 East Belford Avenue, Mailstop M23IR, Englewood, CO 80112. The Western Union Company - Proxy Statement | 18

  • Page 37
    ... Company. Each member of the Audit Committee is financially literate, knowledgeable, and qualified to review financial statements. The Board has designated Mr. Goodman and Mr. Devitre as "financial experts" as defined by Item 407(d) of Regulation S-K. Service on Other Audit Committees: No director...

  • Page 38
    ... in the Company's Proxy Statement and Annual Report; • in consultation with the Chief Executive Officer, reviewing management succession planning; • reviewing and recommending to the Board of Directors compensation for non-employee directors; and • periodically reviewing the overall...

  • Page 39
    ...regulatory requirements. Among other things, the Compliance Committee is responsible for reviewing: • the Company's compliance programs and policies relating to anti-money laundering laws, including establishing procedures to be apprised of material investigations or other material matters that...

  • Page 40
    ...-evaluation procedures for the Board of Directors and its committees; • reviewing stockholder proposals submitted for inclusion in the Company's Proxy Statement; • reviewing the Company's related persons transaction policy, and as necessary, reviewing specific related person transactions...

  • Page 41
    ... writing to: The Western Union Company, Board of Directors, 12500 East Belford Avenue, Mailstop M21A2, Englewood, CO 80112. Communications that are intended specifically for non-management directors should be addressed to the attention of the Chairperson of the Corporate Governance and Public Policy...

  • Page 42
    ... Senior Financial Officers, Reporting Procedure for Accounting and Auditing Concerns, Professional Conduct Policy for Attorneys, and the Code of Conduct are available without charge through the "Investor Relations, Corporate Governance" portion of the Company's website, www.wu.com, or by writing to...

  • Page 43
    ... Chief Executive Officer, does not receive additional compensation for his service as a director. Since January 1, 2011, our outside directors have not received an increase in their annual Board retainer or annual equity grant value. NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT...

  • Page 44
    ... of service as a non-employee director during 2013. Each outside director, except for our non-United States resident director, has the option of electing to receive such director's annual retainer fees described above in the form of (a) all cash, (b) a combination of cash, fully vested stock options...

  • Page 45
    ... in Western Union equal to five times his or her annual cash retainer, which must be achieved within five years of the director's initial election to the Board. The holdings that generally may be counted toward achieving the equity investment guidelines include outstanding stock awards or units...

  • Page 46
    ...the review and discussions described above, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Company's Annual Report on Form 10-K for the year ended December 31, 2013 for filing with the Securities and Exchange Commission...

  • Page 47
    ... with management and, based on such review and discussion, the Compensation and Benefits Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company's Proxy Statement and its Annual Report on Form 10-K. Compensation and Benefits Committee...

  • Page 48
    ... 2012; and • Cash flow from operations of $1.1 billion, down 8% from 2012. Please see our 2013 Annual Report on Form 10-K for more information regarding our performance. PROXY STATEMENT The Company's 2013 strategies were focused on strengthening our consumer money transfer business, increasing...

  • Page 49
    ...effective March 2012. • No 2012 Chief Executive Officer Bonus: Based on 2012 Company performance, our Chief Executive Officer did not receive a bonus in 2013. • 2 013 Annual Incentive Includes Restricted Stock Unit Component: In 2013, we modified the Company's Annual Incentive Plan design to...

  • Page 50
    ...(3): Cash and All Other Compensation Equity-Based Awards 8.8 7.8 NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT 8 7.9 7.0 6 4.9 CHIEF EXECUTIVE OFFICER 2013 TOTAL DIRECT COMPENSATION 4 5.4 2.4 1.8 2.5 0.5 1.3 2.4 12% 2 0 2011 2012 2013 71% 17% (1) Long-Term Equity...

  • Page 51
    ... pay opportunity vs. current pay. In 2013, all of the long-term incentive awards delivered to our named executive officers were in the form of equity-based compensation and the Annual Incentive Plan included a restricted stock unit component to be delivered if the Company achieved 2013 strategic...

  • Page 52
    ... on pay" vote. NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT In early 2014, the committee chair and certain members of management held discussions regarding executive compensation matters with stockholders who collectively held over 25% of the Company's outstanding Common Stock...

  • Page 53
    ...with the information presented in the "Executive Compensation" section of this Proxy Statement. For 2013, the named executive officers were: • Hikmet Ersek, President and Chief Executive Officer (September 2010 to present) • Scott T. Scheirman, Executive Vice President, Chief Financial Officer...

  • Page 54
    ... of and decisions relating to executive compensation. The Chief Executive Officer did not attend portions of the meetings relating to his compensation. The Compensation Committee regularly conducts executive sessions without management present. The Western Union Company - Proxy Statement | 36

  • Page 55
    ...the Board of Directors, who then evaluated Mr. Ersek's performance in 2012 based on his actual performance versus such goals. In setting Mr. Ersek's compensation, the committee considered this NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT 37 | The Western Union Company - Proxy...

  • Page 56
    ... business, executive talent and capital. Accordingly, the Company's peer group includes companies meeting either of the following criteria: • Global brands providing virtual products or services; or • Companies involved with payment and processing services. NOTICE OF 2014 ANNUAL MEETING...

  • Page 57
    ... 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT Ameriprise Financial Automatic Data Processing Charles Schwab CME Group Comerica Discover Financial Services eBay Fidelity National Information Services Fiserv Global Payments Intuit MasterCard MoneyGram NASDAQ OMX Northern Trust State Street...

  • Page 58
    ... paid. NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT The Western Union Executive Compensation Program Pay-For-Performance The principal components of the 2013 executive compensation program were annual base salary, annual incentives in the form of cash and restricted stock unit...

  • Page 59
    ...CHIEF EXECUTIVE OFFICER 2013 TOTAL DIRECT COMPENSATION NAMED EXECUTIVE OFFICERS 2013 TOTAL DIRECT COMPENSATION 12% 22% NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT 71% 17% 58% 20% Long-Term Equity Compensation Base Salary Annual Incentive Long-Term Equity Compensation...

  • Page 60
    ... The Western Union Company dated January 16, 2014 (the "Separation Agreement"), Mr. Scheirman forfeited his restricted stock unit award under the 2013 Annual Incentive Plan. variable compensation elements, provides alignment with the Company's short and long-term financial and strategic priorities...

  • Page 61
    ... Decisions None of our named executive officers received a salary increase in 2013 from levels established in March 2012 (or, if later, the executive's hire date). See pages 53-56. Cash Component: Based on the achievement of corporate financial and/or individual/ business unit goals, the committee...

  • Page 62
    ... OF 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT Stock options represent 33% of the long-term grant value, reflecting the Company's emphasis on tying long-term incentive awards to the Company's stock price. See pages 47-48. Each of Western Union's 2013 executive compensation program...

  • Page 63
    ... unit measures used in determining the cash payout level. Each named executive officer's 2013 target award opportunity was unchanged from the level established for the executive in 2012. Cash Component: Weighting of Corporate/Individual/Business Unit Measures Individual/ Corporate Business Unit 100...

  • Page 64
    ... objectives described below for the grant of the restricted stock unit component based upon key strategic initiatives that supported the Company's strategic operating plan. NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT The Western Union Company - Proxy Statement | 46

  • Page 65
    ... paid had the Company achieved its internal plan for its strategic performance goals), and did not reduce the cash component of the 2013 annual incentive awards. Please see "-Compensation of Our Named Executive Officers" for further information regarding the payouts received by each named executive...

  • Page 66
    ...of forecasting multi-year financial results, the Compensation Committee believed that it was appropriate to use shorter-term financial objectives as key indicators of the Company's execution of its 2013 strategic plan. Under the terms of the performance-based restricted stock unit awards, as much as...

  • Page 67
    ...45,465 95,716 NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT In connection with his separation from the Company and pursuant to the Separation Agreement, Mr. Scheirman will receive a prorated payout of the 2013 performance-based restricted stock units based on actual performance...

  • Page 68
    ...Full-time and Regular Part-time Employees X Benefit or Perquisite 401(k) Plan Supplemental Incentive Savings Plan (a nonqualified defined contribution plan) Severance and Change-in-Control Benefits Health and welfare benefits Limited Perquisites X The Western Union Company - Proxy Statement | 50

  • Page 69
    ... Payments Upon Termination or Change-inControl" section of this Proxy Statement for further information regarding the Executive Severance Policy and the treatment of awards upon qualifying termination events or a change-in-control. Retirement Savings Plans. Western Union executives on United States...

  • Page 70
    ... ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT J. David Thompson John R. Dye 2x salary 2x salary What Counts Toward the Guideline • Western Union securities owned personally • Shares held in any Western Union benefit plan • After-tax value of unvested shares of restricted stock...

  • Page 71
    ... 162(m) of the Internal Revenue Code, named executive officer (other than the Chief Financial Officer) compensation over $1 million for any year is generally not deductible for United States income tax purposes. Performance-based compensation is exempt from the deduction limit, however, if certain...

  • Page 72
    ... Agreement, Mr. Scheirman forfeited his restricted stock unit award under the 2013 Annual Incentive Plan. As an executive officer holding a corporate-wide position, the Compensation Committee determined that it was appropriate that Mr. Scheirman's cash opportunity under the Annual Incentive Plan...

  • Page 73
    ...or $810,000. As a business unit leader in 2013, the Compensation Committee determined that it was appropriate that Mr. Agrawal's cash opportunity under the Annual Incentive Plan be based 50% on corporate performance and 50% on the performance of Western Union Business Solutions as well as individual...

  • Page 74
    ...of both the cash and restricted stock unit award components) was 200% of Mr. Dye's target, or $800,000. As an executive officer holding a corporate-wide position, the Compensation Committee determined that it was appropriate that Mr. Dye's cash opportunity under the Annual Incentive Plan be based 75...

  • Page 75
    ... ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT Name and Principal Position Hikmet Ersek (5) President and Chief Executive Officer Scott T. Scheirman EVP and Chief Financial Officer Rajesh K. Agrawal Stock Option Salary (1) Bonus Awards Awards Year ($000) ($000) ($000) (2) ($000) (2) 2013 2012...

  • Page 76
    Executive Compensation (5) PROXY STATEMENT For 2013, Mr. Ersek's salary and retirement plan contributions were denominated in United States dollars but were paid to or on behalf of Mr. Ersek in euros, based on a conversion rate that was determined each calendar quarter. The conversion rates 0....

  • Page 77
    ... earned by each named executive officer is included in the Non-Equity Incentive Plan Compensation column in the 2013 Summary Compensation Table. Pursuant to the terms of the Separation Agreement, Mr. Scheirman received a cash payment equal to his 2013 bonus under the Annual Incentive Plan, based on...

  • Page 78
    ... granted to each of the named executive officers are subject to time-based vesting provisions described in the footnotes to the 2013 Grants of Plan-Based Awards Table. The 2013 performancebased restricted stock unit awards will vest if and only to The Western Union Company - Proxy Statement | 60

  • Page 79
    ... Statement, the 2013 annual incentive awards include cash and restricted stock unit components. Under the Annual Incentive Plan, participants are eligible to receive a cash payout ranging from 0% to 125% of target based on the achievement of corporate financial and individual/business unit goals...

  • Page 80
    ...held by each of the named executive officers on December 31, 2013. 2013 Outstanding Equity Awards at Fiscal Year-End Table NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT Option Awards Stock Awards Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That...

  • Page 81
    ... of a change-in-control of First Data Corporation. The market value of shares or units of stock that have not vested reflects a stock price of $17.25, the closing stock price on December 31, 2013. In accordance with the SEC executive compensation disclosure rules, the amounts reported in this...

  • Page 82
    ...date or as otherwise provided for pursuant to the Executive Severance Policy. In connection with his separation from the Company and pursuant to the Separation Agreement, Mr. Scheirman forfeited this award. NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT The Western Union Company...

  • Page 83
    Executive Compensation PROXY STATEMENT The following table provides information concerning each exercise of stock options and each vesting of stock during 2013 for each of the named executive officers. 2013 Option Exercises and Stock Vested Table NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS AND ...

  • Page 84
    ...2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT Potential Payments Upon Termination or Change-in-Control Executive Severance Policy We maintain an Executive Severance Policy for the payment of certain benefits to senior executives, including our named executive officers, upon termination of...

  • Page 85
    ... necessary to pay such tax. (If the benefits so payable do not exceed such 110% threshold, the amount thereof will be reduced to the maximum amount not subject to such excise tax.) NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT 67 | The Western Union Company - Proxy Statement

  • Page 86
    ... equity awards include retirement-vesting provisions, none of our current named executive officers are retirement eligible. NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT Payments Upon Termination or Change-in-Control TERMINATION FOLLOWING A CHANGE-IN-CONTROL(1) Welfare Benefits...

  • Page 87
    ... Internal Revenue Code Sections 280G and 4999. The equity is valued using a closing stock price of $17.25 on December 31, 2013. Pursuant to the terms of the Executive Severance Policy, Messrs. Thompson, Agrawal and Dye are not eligible to receive tax-gross up payments following a change-in-control...

  • Page 88
    ... two years posttermination (three years, in the case of the CEO) and (ii) the expiration date. Forfeit Effective for grants on January 31, 2011 and later, prorated vesting by grant based on ratio of days since grant to total days in vesting period. The Western Union Company - Proxy Statement | 70

  • Page 89
    ...fraud. This policy helps to discourage inappropriate risks, as executives will be held accountable for misconduct which is harmful to the Company's financial and reputational health. NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT 71 | The Western Union Company - Proxy Statement

  • Page 90
    ... a change-in-control.  Maximum payout caps for annual cash incentive compensation and performance-based restricted stock unit awards.  "Clawback" Policy.  Robust stock ownership guidelines. NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT The Western Union Company - Proxy...

  • Page 91
    ... effective March 2012. • No 2012 Chief Executive Officer Bonus: Based on 2012 Company performance, our Chief Executive Officer did not receive a bonus in 2013. • 2013 Annual Incentive Includes Restricted Stock Unit Component: In 2013, we modified the Company's Annual Incentive Plan design to...

  • Page 92
    ... million in 2013 and 2012, respectively. Audit fees primarily include fees related to the integrated audit of the Company's annual consolidated financial statements and internal control over financial reporting; the review of its quarterly consolidated financial statements; statutory audits required...

  • Page 93
    ... annual meetings. This proposal should also be more favorably evaluated due to our company's clearly improvable corporate governance performance as reported in 2013: GMI Ratings, an independent investment research firm, was concerned about our executive pay. GMI said Western Union can give long-term...

  • Page 94
    ... STATEMENT BOARD OF DIRECTORS STATEMENT IN OPPOSITION TO STOCKHOLDER PROPOSAL REGARDING STOCKHOLDER ACTION BY WRITTEN CONSENT The Board of Directors recommends that you vote AGAINST this proposal. Western Union has demonstrated its commitment to principles of sound corporate governance, working...

  • Page 95
    ...being taken by the Board of Directors, and therefore, its approval would not effectuate the actions requested by the proposal. THE BOARD RECOMMENDS THAT YOU VOTE AGAINST PROPOSAL 4. NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT 77 | The Western Union Company - Proxy Statement

  • Page 96
    ... websites. The Company's Board and its shareholders need comprehensive disclosure to be able to fully evaluate the political use of corporate assets. We urge your support for this critical governance reform. The Western Union Company - Proxy Statement NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS...

  • Page 97
    ... Board of Directors recommends that you vote AGAINST this proposal. NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT The Company has historically made an extremely limited number of political contributions, which are not financially material to the Company. In 2013, 2012, and 2011...

  • Page 98
    ... by the Western Union Political Action Committee, the sole political action committee affiliated with the Company, are required to be reported and a list of such contributions is publicly available at the website of the United States Federal Election Commission. Contributions made directly by the...

  • Page 99
    ... costs to the company except as authorized by the Board of Directors. SUPPORTING STATEMENT As reported by the Interfaith Center on Corporate Responsibility, the forceful exploitation of personsâˆ'for labor or sexual purposesâˆ'is the third largest illegal "business." In 2012, the International Labor...

  • Page 100
    ... Code of Conduct, which is available in the "Corporate Governance" section of our Investor Relations website, requires our employees to comply with such laws in the numerous countries in which we operate. As the proposal acknowledges, the Company participates in the United States Homeland Security...

  • Page 101
    ... of a majority of the outstanding capital stock entitled to vote on the subject matter is required to approve this Proposal 6. THE BOARD RECOMMENDS THAT YOU VOTE AGAINST PROPOSAL 6. NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT 83 | The Western Union Company - Proxy Statement

  • Page 102
    ... were used in computing the weighted-average exercise price. This amount represents shares of Common Stock available for issuance under The Western Union Company 2006 Long-Term Incentive Plan and The Western Union Company 2006 Non-Employee Director Equity Compensation Plan. Awards available for...

  • Page 103
    ... NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT Name of Beneficial Owner 5% Owners Capital Research Global Investors, a division of Capital Research and Management Company FMR LLC The Vanguard Group Blackrock, Inc. Directors and Named Executive Officers (5) Dinyar S. Devitre...

  • Page 104
    ...Owned by Directors, Executive Officers and Our Largest Stockholders (2) PROXY STATEMENT The number of shares held and percentage of outstanding shares were obtained from the holder's Schedule 13G filing with the Securities and Exchange Commission dated February 14, 2014, which reports ownership as...

  • Page 105
    ... Company's Related Person Transactions Policy is available through the "Investor Relations, Corporate Governance" portion of the Company's website, www.wu.com. NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT Section 16(a) Beneficial Ownership Reporting Compliance PROXY STATEMENT...

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    2013 FORM 10-K MOVING MONEY FOR BETTER

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  • Page 111
    ... No.) THE WESTERN UNION COMPANY 12500 East Belford Avenue Englewood, Colorado 80112 (Address of principal executive offices) Registrant's telephone number, including area code: (866) 405-5012 Securities registered pursuant to Section 12(b) of the Act: Title of each class Common Stock, $0.01 Par...

  • Page 112
    ... Officers and Corporate Governance ...Executive Compensation...Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters...Certain Relationships and Related Transactions, and Director Independence ...Principal Accounting Fees and Services ...Other Information...

  • Page 113
    ... market acceptance of such services; changes in, and failure to manage effectively, exposure to foreign exchange rates, including the impact of the regulation of foreign exchange spreads on money transfers and payment transactions; our ability to maintain our agent network and business relationships...

  • Page 114
    • mergers, acquisitions and integration of acquired businesses and technologies into our Company, including Travelex Global Business Payments, and the failure to realize anticipated financial benefits from these acquisitions, and events requiring us to write down our goodwill; any material breach...

  • Page 115
    ..., and the actions of the Consumer Financial Protection Bureau, and similar legislation and regulations enacted by other government authorities; changes in United States or foreign laws, rules and regulations including the Internal Revenue Code, governmental or judicial interpretations thereof and...

  • Page 116
    ... to send money around the world, usually within minutes. As of December 31, 2013, our services were available through a global network of over 500,000 agent locations in more than 200 countries and territories, with approximately 90% of those locations outside of the United States. Each location in...

  • Page 117
    ... to send money over the Internet or phone using a credit or debit card, or through a withdrawal directly from a consumer's bank account. All agent locations accept cash to initiate a transaction, and some also accept debit cards. We offer consumers several options to receive a money transfer. While...

  • Page 118
    ...a lower-priced next day delivery service option for money transfers that do not need to be received within minutes. Online money transfer service. Western Union branded websites allow consumers to send funds online, including through mobile devices, generally using a credit or debit card for pay-out...

  • Page 119
    ... the transfers. Western Union provides central operating functions such as transaction processing, settlement, marketing support and customer relationship management to our agents, as well as compliance training and related support. Some of our agents outside the United States manage subagents...

  • Page 120
    ..., auto finance companies, mortgage servicers, financial service providers, government agencies and other businesses. We believe our business customers who receive payments through our services benefit from their relationship with Western Union as it provides them with real-time or near real-time...

  • Page 121
    ...Union Payments service allows consumers to send funds to businesses and government agencies, primarily across the United States and Canada, using cash and, in certain locations, a debit card. This service is offered primarily at Western Union agent locations, but is provided via our westernunion.com...

  • Page 122
    ... countries, we write foreign currency forward and option contracts for customers to facilitate future payments. Distribution and Marketing Channels Our business payment services are primarily offered over the phone, through partner channels, and via the Internet. Our Internet services are marketed...

  • Page 123
    ... for the review and closing of acquisitions. Customers use our money orders for making purchases, paying bills, and as an alternative to checks. We derive investment income from interest generated on our money order settlement assets, which are primarily held in United States tax exempt state and...

  • Page 124
    ...component of the Western Union business model is our ability to manage financial risk associated with conducting transactions worldwide. We settle with the majority of our agents in United States dollars or euros. However, in certain circumstances, we settle in other currencies. We typically require...

  • Page 125
    ... services, credit and debit cards, electronic payments, foreign exchange hedging services and the sale of spot, forward and option currency contracts, unclaimed property, the regulation of competition, consumer privacy, data protection and information security. Failure by Western Union, our agents...

  • Page 126
    ... require money transfer providers and their agents to comply with federal and/or state anti-money laundering laws and regulations. Outside of the United States, our money transfer business is subject to some form of regulation in all of the countries and territories in which we offer those services...

  • Page 127
    ... impact on our business, financial condition, and results of operations. Government agencies both inside and outside the United States may impose new or additional rules on money transfers affecting us or our agents or their subagents, including regulations that prohibit transactions in, to or...

  • Page 128
    ... direct examination and supervision of Western Union and its largest competitors by the CFPB. Additionally, rules adopted under the Dodd-Frank Act by the Commodity Futures Trading Commission, as well as by member states of the European Union pursuant to the European Market Infrastructure Regulation...

  • Page 129
    ... collect, transfer, disclose, use and store personal information in order to provide our services. These activities are subject to information security standards, data privacy, data breach and related laws and regulations in the United States and other countries. In the United States, data privacy...

  • Page 130
    ...to accepting credit cards. We are subject to annual reviews to ensure compliance with PCI regulations worldwide and are subject to fines if we are found to be non-compliant. Stored-value services offered by Western Union are subject to United States federal and state laws and regulations, as well as...

  • Page 131
    ...and Managing Director for the Latin America and Caribbean region from December 2010 to December 2012. Prior to joining Western Union, Mr. Almeida worked at FleetBoston Financial, The Coca-Cola Company and Colgate-Palmolive in Brazil, Canada, Mexico and the United States. John R. Dye is our Executive...

  • Page 132
    ...) and President, Western Union Ventures (from August 2011). Prior to April 2011, Ms. Scott was Senior Vice President, Marketing, Americas since March 2009. From March 2008 to March 2009, Ms. Scott served as Vice President, Marketing Services, and General Manager, Domestic Money Transfer. From March...

  • Page 133
    ... money transfer funds, or limit our ability to or prohibit us from transferring money in certain corridors; federal, state or foreign legal requirements, including those that require us to provide consumer or transaction data pursuant to our agreement and settlement with the State of Arizona and...

  • Page 134
    ...reduced sales or business as a result of a deterioration in economic conditions. As a result, our agents could reduce their numbers of locations or hours of operation, or cease doing business altogether. Businesses using our services may make fewer cross-currency payments or may have fewer customers...

  • Page 135
    ... terms and our business, financial condition and results of operations could be adversely impacted. • • • We face competition from global and niche or corridor money transfer providers, United States and international banks, card associations, card-based payments providers and a number...

  • Page 136
    ... in our financial statements. We operate in almost all the emerging markets throughout the world. For many countries in these markets, our foreign currency exposure is limited because most transactions are receive transactions and we settle with our agents in either United States dollars or euros as...

  • Page 137
    ... and could damage our reputation, business, financial condition and results of operations. We collect, transfer and retain consumer, business, employee and agent data as part of our business. These activities are subject to laws and regulations in the United States and other jurisdictions, see risk...

  • Page 138
    ... intellectual property rights in some foreign countries; entering new markets with the services of the acquired businesses; and general economic and political conditions, including legal and other barriers to cross-border investment in general, or by United States companies in particular. 2013 FORM...

  • Page 139
    ... these contracts, we may be exposed to the value of an offsetting position with a financial institution counterparty. We offer consumers, primarily in the United States, the ability to transfer money utilizing their bank account or credit or debit card via the Internet and phone. These transactions...

  • Page 140
    ... of our agreement and settlement with the State of Arizona and changes to our business model, primarily related to our Vigo and Orlandi Valuta brands, resulted in the loss of over 7,000 agent locations in Mexico in 2012. In addition, agents may generate fewer transactions or less revenue for various...

  • Page 141
    ... with the name would harm our business. Similar to the Western Union trademark, the Vigo, Orlandi Valuta, Speedpay, Equity Accelerator, Pago Fácil, Western Union Payments, Quick Collect, Quick Pay, Quick Cash, Convenience Pay, Western Union Business Solutions and other trademarks and service marks...

  • Page 142
    ... paid as of December 31, 2013. See the "Capital Resources and Liquidity" discussion in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations. The IRS completed its examination of the United States federal consolidated income tax returns of First Data...

  • Page 143
    ... from operations to payments on our debt, thereby reducing funds available for working capital, capital expenditures, acquisitions and other purposes. There would be adverse tax consequences associated with using certain earnings generated outside the United States to pay the interest and principal...

  • Page 144
    ..., payment services, credit and debit cards, electronic payments, foreign exchange hedging services and the sale of spot, forward and option currency contracts, unclaimed property, the regulation of competition, consumer privacy, data protection and information security. The failure by us, our agents...

  • Page 145
    ... settlement with the State of Arizona. See risk factor "Western Union is the subject of governmental investigations and consent agreements with or enforcement actions by regulators." Due to regulatory initiatives, we have changed our compliance related practices and business model along the United...

  • Page 146
    ... the number of locations at which money transfer services are offered, an increase in the commissions paid to agents and their subagents to compensate for their increased costs, and other negative consequences. For example, changes to our compliance-related practices as a result of our agreement and...

  • Page 147
    ... to maintain our agent, subagent or global business payments networks under terms consistent with those currently in place, or if our agents or their subagents fail to comply with Western Union business and technology standards and contract requirements, our business, financial condition and results...

  • Page 148
    ... new secondary recommendations that the Monitor makes after the date of the Amendment. 2013 FORM 10-K The Amendment also requires WUFSI to make a one-time payment of $250,000 and thereafter $150,000 per month for five years to fund the activities and expenses of a money transfer transaction data...

  • Page 149
    ... the Company's business, financial condition or results of operations. We are in the process of making or have made certain changes to our compliance program for transactions from the United States to Mexico and the Latin America and the Caribbean region, including revisions to agent agreements to...

  • Page 150
    On March 20, 2012, the Company was served with a federal grand jury subpoena issued by the United States Attorney's Office for the Central District of California ("USAO") seeking documents relating to Shen Zhou International ("US Shen Zhou"), a former Western Union agent located in Monterey Park, ...

  • Page 151
    ...larger participants of a market for other consumer financial products or services" to include companies, such as Western Union, that make at least one million aggregate annual international money transfers. Companies that are included in a final rule will be subject to direct supervision by the CFPB...

  • Page 152
    ... has been the subject of class-action litigation in the United States, alleging that its foreign exchange rate disclosures failed to adequately inform consumers about the revenue that Western Union and its agents derive from international remittances. These suits were all settled in or before 2004...

  • Page 153
    ...the Company waits too long to inform consumers if their money transfers are not redeemed by the recipients and that we use the unredeemed funds to generate income until the funds are escheated to state governments. During the fourth quarter of 2012, the parties executed a settlement agreement, which...

  • Page 154
    ... Executive Officer and a former executive officer received excessive compensation based on the allegedly inaccurate financial statements. On January 19, 2014, Stanley Leiblein filed a shareholder derivative complaint in the United States District Court for the District of Colorado naming the Company...

  • Page 155
    ... of operations and financial condition. We are subject to requirements relating to privacy and data use and security under federal, state and foreign laws. For example, the United States Federal Trade Commission has an on-going program of investigating the privacy practices of companies and has...

  • Page 156
    ... holding company for purposes of United States law or the law of any other jurisdiction, as a global provider of payments services and in light of the changing regulatory environment in various jurisdictions, we could become subject to new capital requirements introduced or imposed by our regulators...

  • Page 157
    ... ruling from the IRS to the effect that the Spin-off (including certain related transactions) qualifies as a tax-free transaction to First Data, us and First Data stockholders for United States federal income tax purposes under sections 355, 368 and related provisions of the Internal Revenue Code...

  • Page 158
    ... United States and over 400 international leased properties. Our owned facilities include our corporate headquarters located in Englewood, Colorado. Our owned and leased facilities are used for operational, sales and administrative purposes in support of our Consumer-toConsumer, Consumer-to-Business...

  • Page 159
    ...internal controls. On February 11, 2014, R. Andre Klein filed a shareholder derivative complaint in the United States District Court for the District of Colorado naming the Company's President and Chief Executive Officer, one of its former executive officers, and all but one of its current directors...

  • Page 160
    ... with state and federal anti-money laundering laws and regulations after receiving red flags indicating prolonged willful illegality, reappointed the same directors to the Company's Audit Committee between 2006 and 2014 and awarded excessive compensation packages to Western Union's senior executives...

  • Page 161
    ... the Company. On March 20, 2012, the Company was served with a federal grand jury subpoena issued by the United States Attorney's Office for the Central District of California ("USAO") seeking documents relating to Shen Zhou International ("US Shen Zhou"), a former Western Union agent located in...

  • Page 162
    ... be unable to do so, provided the plan is adopted when we are not aware of material non-public information. Refer to Part II, Item 8, Financial Statements and Supplementary Data, Note 16, "Stock Compensation Plans" for information related to our equity compensation plans. 2013 FORM 10-K 52

  • Page 163
    ... primarily on our receiving dividends from our operating subsidiaries. Several of our operating subsidiaries are subject to financial services regulations and their ability to pay dividends may be restricted. On February 21, 2014, the Board of Directors declared a quarterly cash dividend of $0.125...

  • Page 164
    ... information set forth below in conjunction with our historical consolidated financial statements and the notes to those statements included elsewhere in this Annual Report on Form 10-K. Year Ended December 31, (in millions, except per share data) 2013 2012 2011 2010 2009 Statements of Income Data...

  • Page 165
    ... of 2009, the Board of Directors declared an annual cash dividend of $0.06 per common share. Consumer-to-Consumer transactions include Western Union, Vigo and Orlandi Valuta branded Consumer-to-Consumer money transfer services worldwide. (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) 2013 FORM...

  • Page 166
    ...'s business relates to exchanges of currency at the spot rate, which enables customers to make cross-currency payments. In addition, in certain countries, we write foreign currency forward and option contracts for customers to facilitate future payments. Travelex Global Business Payments ("TGBP...

  • Page 167
    ... 31, 2013. • Driving growth in Western Union Business Solutions - In Western Union Business Solutions, we are working to drive new customer acquisition and growth opportunities with existing customers through increased sales effectiveness and tailored product solutions for specific market segments...

  • Page 168
    ...2013, 2012 and 2011. % Change 2013 2012 vs. 2012 vs. 2011 (in millions, except per share amounts) Year Ended December 31, 2013 2012 2011 Revenues: Transaction fees...Foreign exchange revenues ...Other revenues...Total revenues...Expenses: Cost of services... 1.85 1.84 630.6 634.2 2013 FORM 10-K 58

  • Page 169
    ... transfer and the locations from and to which the funds are sent and received. Additionally, in certain consumer money transfer and Business Solutions transactions involving different send and receive currencies, we generate foreign exchange revenues based on the difference between the exchange rate...

  • Page 170
    ... as revenue decreases, the strengthening of the United States dollar compared to most other foreign currencies, which resulted in a positive impact on the translation of our expenses, and savings from our productivity and cost-savings initiatives. We currently expect agent commission rates for...

  • Page 171
    ... on foreign currency forward contracts entered into in order to reduce the economic variability related to the cash amounts used to fund acquisitions of businesses with purchase prices denominated in foreign currencies, primarily for the TGBP acquisition. Income taxes Our effective tax rates on pre...

  • Page 172
    We continue to benefit from a significant proportion of profits being foreign-derived, and generally taxed at lower rates than our combined federal and state tax rates in the United States. For the years ended December 31, 2013, 2012 and 2011, 103%, 92% and 67% of our pre-tax income was derived from...

  • Page 173
    ... revenues as a percentage of the consolidated totals for the years ended December 31, 2013, 2012 and 2011. Year Ended December 31, 2013 2012 2011 Consumer-to-Consumer ...Consumer-to-Business ...Business Solutions ...Other ... 80% 11% 7% 2% 100% 81% 11% 6% 2% 100% 84% 11% 3% 2% 100% 2013 FORM...

  • Page 174
    ...years ended December 31, 2013, 2012 and 2011. Year Ended December 31, 2013 2012 2011 % Change 2013 2012 vs. 2012 vs. 2011 (dollars and transactions in millions) Revenues: Transaction fees ...$ 3,396.1 $ 3,545.6 $ 3,580.2 Foreign exchange revenues ...981.3 988.5 983.1 Other revenues ...56.2 50.2 45...

  • Page 175
    ...westernunion.com"), 100% of the revenue and transactions are attributed to westernunion.com. We view our Consumer-to-Consumer money transfer service as one interconnected global network where a money transfer can be sent from one location to another, around the world, including related transactions...

  • Page 176
    ... from our agreement and settlement with the State of Arizona and changes to our business model, primarily for our Vigo® and Orlandi ValutaSM brands. These changes resulted in the loss of over 7,000 agent locations in the third quarter of 2012. Transactions increased in our Mexico business for the...

  • Page 177
    ... United States outbound business experienced revenue and transaction declines, in part due to changes in our compliance related practices as a result of our agreement and settlement with the State of Arizona and changes to our business model, primarily for our Vigo brand to Latin America, and price...

  • Page 178
    ... 31, 2013, revenue declines in our United States cash-based bill payments business, and the passing through to certain billers of some of our debit card fee savings related to the Durbin Legislation. We expect that the United States dollar value of our Consumer-to-Business segment's revenue and...

  • Page 179
    ... year primarily due to revenue declines in our United States cash-based bill payments business, the renegotiation of a sales and distribution agreement, and expenses related to productivity and cost-savings initiatives, partially offset by a net decrease in debit card and other bank fees due to the...

  • Page 180
    ... 2013 FORM 10-K During the year ended December 31, 2012, the decrease in operating loss was due to costs associated with acquisition activity that occurred in the prior year, partially offset by declines in our money order business, including a decrease in investment income, and expenses related...

  • Page 181
    ... as of December 31, 2013, and include assets outside of the United States subject to restrictions from being transferred outside of the countries where these assets are located. We believe we have adequate liquidity to meet our business needs through our existing cash balances and our ability to...

  • Page 182
    ... with applicable regulations. Additionally, as of December 31, 2013, we held non-settlement related investments of $100.2 million in a short-term bond mutual fund. Investment securities are exposed to market risk due to changes in interest rates and credit risk. We regularly monitor credit risk and...

  • Page 183
    ...a) We utilize interest rate swaps designated as fair value hedges to effectively change the interest rate payments on a portion of our notes from fixed-rate payments to short-term LIBOR-based variable rate payments in order to manage our overall exposure to interest rates. The changes in fair value...

  • Page 184
    ... of each borrowing and is payable according to the terms of that borrowing. Generally, interest is calculated using a selected LIBOR rate plus an interest rate margin of 100 basis points. A facility fee of 12.5 basis points is also payable quarterly on the total facility, regardless of usage. Both...

  • Page 185
    ... semi-annually on February 26 and August 26 each year based on the fixed per annum rate of 6.500%. We may redeem the 2014 Notes at any time prior to maturity at the greater of par or a price based on the applicable treasury rate plus 50 basis points. For discussion of our debt service requirements...

  • Page 186
    ...our Revolving Credit Facility available to support the needs of our business. Capital Expenditures The total aggregate amount paid for contract costs, purchases of property and equipment and purchased and developed software was $241.3 million, $268.2 million and $162.5 million in 2013, 2012 and 2011...

  • Page 187
    ... receiving regulatory approval. On October 31, 2011, we acquired the remaining 70% interest in Finint, one of our largest money transfer agents in Europe, for cash consideration of â,¬99.6 million ($139.4 million). We previously held a 30% equity interest in Finint. On April 20, 2011, we acquired...

  • Page 188
    ..., equity long-short, commodities/currencies, multi-strategy, event driven, and global-macro. The Plan holds derivative contracts directly which consist of interest rate swap agreements, under which the Plan is committed to pay a short-term LIBOR-based variable interest rate in exchange for a fixed...

  • Page 189
    ...outside our control. (e) Represents the liability position of our foreign currency and interest rate derivative contracts as of December 31, 2013, which will fluctuate based on market conditions. (f) This line item relates to accrued and unpaid initial payments for new and renewed agent contracts as...

  • Page 190
    ... be subject to United States federal income taxes (subject to an adjustment for foreign tax credits), state income taxes and possible withholding taxes payable to various foreign countries which could result in a material impact to our financial condition, results of operations and cash flows in the...

  • Page 191
    ...of operations and cash flows. Derivative Financial Instruments We use derivatives to (a) minimize our exposures related to changes in foreign currency exchange rates and interest rates and (b) facilitate cross-currency Business Solutions payments by writing derivatives to customers. We recognize all...

  • Page 192
    ... requires management judgment as to the amount to capitalize and the related period of benefit. Our accounting policy is to limit the amount of capitalized costs for a given agent contract to the lesser of the estimated future cash flows from the contract or the termination fees we would receive in...

  • Page 193
    ... our Business Solutions impairment valuation analysis relate to projected revenue and EBITDA margins. For example, a decrease in excess of 200 basis points in the ten-year projected compound annual growth rate of either revenue or EBITDA margin, assuming all other elements of the cash flow model...

  • Page 194
    ... Rates We provide Consumer-to-Consumer money transfer services in more than 200 countries and territories. We manage foreign exchange risk through the structure of the business and an active risk management process. We settle with the vast majority of our agents in United States dollars or euros...

  • Page 195
    ... assets consist of highly-rated state and municipal debt securities which are fixed-rate instruments. These investments may include investments made from cash received from our money transfer business and other related payment services awaiting redemption classified within "Settlement assets" in the...

  • Page 196
    ... among global financial institutions. We also limit our investment level in any individual money market fund to no more than $100 million. We are also exposed to credit risk related to receivable balances from agents in the money transfer, walk-in bill payment and money order settlement process...

  • Page 197
    ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA THE WESTERN UNION COMPANY INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Management's Report on Internal Control Over Financial Reporting ...Reports of Independent Registered Public Accounting Firm ...Consolidated Statements of Income for each of the ...

  • Page 198
    ... may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of Western Union's internal control over financial reporting as of December 31, 2013, utilizing the criteria set forth...

  • Page 199
    ...the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of The Western Union Company as of December 31, 2013 and 2012, and the related consolidated statements of income, comprehensive income, cash flows, and stockholders' equity for each of the...

  • Page 200
    ... financial statements taken as a whole, presents fairly in all material respects the information set forth therein. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), The Western Union Company's internal control over financial...

  • Page 201
    THE WESTERN UNION COMPANY CONSOLIDATED STATEMENTS OF INCOME (in millions, except per share amounts) Year Ended December 31, 2013 2012 2011 Revenues: Transaction fees ...$ Foreign exchange revenues ...Other revenues ...Total revenues ...Expenses: Cost of services ...Selling, general and ...

  • Page 202
    THE WESTERN UNION COMPANY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions) Year Ended December 31, 2013 2012 2011 Net income ...$ Other comprehensive income/(loss), net of tax: Unrealized gains/(losses) on investment securities...Unrealized gains/(losses) on hedging activities ......

  • Page 203
    THE WESTERN UNION COMPANY CONSOLIDATED BALANCE SHEETS (in millions, except per share amounts) December 31, 2013 2012 Assets Cash and cash equivalents ...$ Settlement assets ...Property and equipment, net of accumulated depreciation of $428.6 and $384.5, respectively...Goodwill ...Other intangible ...

  • Page 204
    ......Acquisition of businesses, net (Note 4) ...Net proceeds from settlement of foreign currency forward contracts related to acquisitions ...Net cash used in investing activities ...Cash flows from financing activities Proceeds from exercise of options ...Cash dividends paid ...Common stock...

  • Page 205
    ... WESTERN UNION COMPANY CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (in millions) Common Stock Shares Amount Capital Surplus Retained Earnings Accumulated Other Comprehensive Loss Total Stockholders' Equity Balance, December 31, 2010...Net income ...Stock-based compensation ...Common stock...

  • Page 206
    ...payment services, providing people and businesses with fast, reliable and convenient ways to send money and make payments around the world. The Western Union® brand is globally recognized. The Company's services are primarily available through a network of agent locations in more than 200 countries...

  • Page 207
    THE WESTERN UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Spin-off from First Data On January 26, 2006, the First Data Corporation ("First Data") Board of Directors announced its intention to pursue the distribution of all of its money transfer and consumer payments businesses...

  • Page 208
    THE WESTERN UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following table provides the calculation of diluted weighted-average shares outstanding (in millions): For the Year Ended December 31, 2013 2012 2011 Basic weighted-average shares outstanding ...Common stock ...

  • Page 209
    ... payment transactions related to the Business Solutions segment. Settlement assets consist of cash and cash equivalents, receivables from selling agents and Business Solutions customers, and investment securities. Cash received by Western Union agents generally becomes available to the Company...

  • Page 210
    ... 31, 2013 2012 Settlement assets: Cash and cash equivalents ...$ Receivables from selling agents and Business Solutions customers ...Investment securities ...$ Settlement obligations: Money transfer, money order and payment service payables ...$ Payables to agents ...$ Property and Equipment...

  • Page 211
    ... December 31, 2013, 2012 and 2011, respectively. Acquired contracts include customer and contractual relationships and networks of subagents that are recognized in connection with the Company's acquisitions. The Company capitalizes initial payments for new and renewed agent contracts to the extent...

  • Page 212
    ... or its agents are able to acquire the currency. This foreign exchange revenue is recorded at the time the related consumer money transfer transaction fee revenue is recognized or at the time a customer initiates a transaction through the Company's Business Solutions payment service operations. Cost...

  • Page 213
    ... forwards and options. The changes in fair value related to these contracts are recorded in "Foreign exchange revenues." • • 2013 FORM 10-K The fair value of the Company's derivatives is derived from standardized models that use market based inputs (e.g., forward prices for foreign currency...

  • Page 214
    ... stock units to employees and non-employee directors of the Company who perform services for the Company. In addition, the Company has a stock-based compensation plan that provides for grants of Western Union stock options and stock unit awards to non-employee directors of the Company. All stock...

  • Page 215
    ... In the fourth quarter of 2012 and throughout 2013, the Company implemented initiatives to improve productivity and reduce costs. Costs related to these productivity and cost-savings initiatives include costs related to termination benefits received by certain of the Company's former executives. The...

  • Page 216
    ... WESTERN UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following table presents expenses related to productivity and cost-savings initiatives and restructuring activities as reflected in the Consolidated Statements of Income (in millions): Year Ended December 31, 2013 2012...

  • Page 217
    THE WESTERN UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 4. Acquisitions On November 7, 2011, the Company acquired the business-to-business payment business known as TGBP from Travelex Holdings Limited for cash consideration of £596 million ($956.5 million), net of a final ...

  • Page 218
    ...WESTERN UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) All assets and liabilities have been recorded at fair value, excluding deferred tax liabilities. The valuation of assets acquired was derived using primarily unobservable Level 3 inputs, which require significant management...

  • Page 219
    ... and class counsel's fees, as well as other expenses will be paid. On November 6, 2013, the Attorney General of California notified Western Union of the California Controller's position that Western Union's deposit of the unclaimed money transfer funds into the class settlement fund pursuant to the...

  • Page 220
    ... quarter of 2012, the Company's Business Solutions business was included in the scope of the Monitor's review. On January 31, 2014, WUFSI and the State agreed to amend the Settlement Agreement. Such amendment (the "Amendment") was subsequently approved by the Superior Court of the State of Arizona...

  • Page 221
    ... the Company's business, financial condition or results of operations. On March 20, 2012, the Company was served with a federal grand jury subpoena issued by the United States Attorney's Office for the Central District of California ("USAO") seeking documents relating to Shen Zhou International ("US...

  • Page 222
    ... designed to place financial responsibility for the obligations and liabilities of the Company's business with the Company and financial responsibility for the obligations and liabilities of First Data's retained businesses with First Data. The Company also entered into a tax allocation agreement...

  • Page 223
    ...$100.2 million as of December 31, 2013. The substantial majority of the Company's investment securities are classified as available-for-sale and recorded at fair value. Investment securities are exposed to market risk due to changes in interest rates and credit risk. Western Union regularly monitors...

  • Page 224
    ... WESTERN UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The components of investment securities are as follows (in millions): Gross Unrealized Gains Gross Unrealized Losses Net Unrealized Gains/ (Losses) December 31, 2013 Amortized Cost Fair Value Settlement assets: State...

  • Page 225
    THE WESTERN UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 8. Fair Value Measurements Fair value, as defined by the relevant accounting standards, represents the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal ...

  • Page 226
    ...): December 31, 2013 2012 Other assets: Derivatives ...Short-term bond mutual fund (Note 7) ...Prepaid expenses...Amounts advanced to agents, net of discounts...Equity method investments...Other receivables ...Debt issue costs...Deferred customer set up costs ...Accounts receivable, net...Other...

  • Page 227
    ... the statutory tax rates in the United States. The Company's effective tax rates differed from statutory rates as follows: Year Ended December 31, 2012 2011 2013 Federal statutory rate ...State income taxes, net of federal income tax benefits ...Foreign rate differential, net of U.S. tax paid on...

  • Page 228
    ...at lower rates than the Company's combined federal and state tax rates in the United States. The increase in the Company's effective tax rate for the year ended December 31, 2012 compared to 2011 is primarily due to the impact of the IRS Agreement, discussed above, which resulted in a tax benefit of...

  • Page 229
    ...foreign country is not material to the Company. The United States federal income tax returns of First Data, which include the Company, are eligible to be examined for 2005 and 2006. The Company's United States federal income tax returns since the Spin-off are also eligible to be examined. 2013 FORM...

  • Page 230
    ... effect on the Company's business, financial condition and results of operations. First Data generally will be liable for all Spin-off Related Taxes, other than those described above. 11. Employee Benefit Plans Defined Contribution Plans The Western Union Company Incentive Savings Plan (the "401...

  • Page 231
    THE WESTERN UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) In addition, the Company sponsors a non-qualified deferred compensation plan for a select group of highly compensated United States employees. The plan provides tax-deferred contributions and the restoration of Company ...

  • Page 232
    ... the long-term rate of return for plan assets. Historical markets are studied and long-term historical risk, return, and co-variance relationships between equities, fixed-income securities, and alternative investments are considered consistent with the widely accepted capital market principle that...

  • Page 233
    ..., equity long-short, commodities/currencies, multi-strategy, event driven, and global-macro. The Plan holds derivative contracts directly which consist of interest rate swap agreements, under which the Plan is committed to pay a short-term LIBORbased variable interest rate in exchange for a fixed...

  • Page 234
    THE WESTERN UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following tables reflect investments of the Trust that were measured and carried at fair value (in millions). For information on how the Company measures fair value, refer to Note 2. December 31, 2013 Asset Class ...

  • Page 235
    THE WESTERN UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (a) Funds included herein have redemption frequencies of daily to monthly, with redemption notice periods of one to ten business days. (b) Substantially all corporate debt securities are investment grade securities. (c)...

  • Page 236
    THE WESTERN UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 12. Operating Lease Commitments The Company leases certain real properties for use as customer service centers and administrative and sales offices. The Company also leases automobiles and office equipment. Certain of ...

  • Page 237
    THE WESTERN UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The components of accumulated other comprehensive loss, net of tax, were as follows (in millions): Year Ended December 31, 2013 2012 2011 Unrealized gains on investment securities, beginning of period ...$ Unrealized ...

  • Page 238
    ... changes in foreign currency exchange rates compared to the United States dollar could have on forecasted revenues denominated in other currencies related to its business. As of December 31, 2013, the Company's longer-term foreign currency forward contracts had maturities of a maximum of 24 months...

  • Page 239
    THE WESTERN UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The Company also uses short duration foreign currency forward contracts, generally with maturities from a few days up to one month, to offset foreign exchange rate fluctuations on settlement assets and obligations ...

  • Page 240
    THE WESTERN UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The Company, at times, utilizes derivatives to hedge the forecasted issuance of fixed-rate debt. These derivatives are designated as cash flow hedges of the variability in the fixed-rate coupon of the debt expected to ...

  • Page 241
    THE WESTERN UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following tables summarize the gross and net fair value of derivative assets and liabilities as of December 31, 2013 and December 31, 2012 (in millions): Offsetting of Derivative Assets Gross Amounts of Recognized ...

  • Page 242
    THE WESTERN UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Income Statement The following tables summarize the location and amount of gains and losses of derivatives in the Consolidated Statements of Income segregated by designated, qualifying hedging instruments and those that...

  • Page 243
    ...expense" in the Consolidated Statements of Income over the life of the related notes. The Company uses foreign currency forward and option contracts as part of its Business Solutions payments operations. These derivative contracts are excluded from this table as they are managed as part of a broader...

  • Page 244
    ... of the fixed rate notes due 2015 and 2017. (b) The Company utilizes interest rate swaps designated as fair value hedges to effectively change the interest rate payments on a portion of its notes from fixed-rate payments to short-term LIBOR-based variable rate payments in order to manage its overall...

  • Page 245
    ...422.8 million. Proceeds from the Company's commercial paper borrowings were used for general corporate purposes. Revolving Credit Facility On September 23, 2011, the Company entered into a credit agreement which expires January 2017 providing for unsecured financing facilities in an aggregate amount...

  • Page 246
    ... certain types of security interests or enter into sale and leaseback transactions. The Company may redeem the 2040 Notes at any time prior to maturity at the greater of par or a price based on the applicable treasury rate plus 30 basis points. On March 30, 2010, the Company exchanged $303.7 million...

  • Page 247
    ... to use cash, including cash generated from operations, proceeds from the sale of non-settlement related investments, and the Revolving Credit Facility, and could also access commercial paper and other financing sources to repay this debt obligation. On November 17, 2006, the Company issued $500...

  • Page 248
    ... FINANCIAL STATEMENTS (Continued) 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...

  • Page 249
    ...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 on the grant date, have 10-year terms, and vest immediately. Since options and deferred stock units under this plan vest immediately, compensation...

  • Page 250
    ... WESTERN UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The Company realized total tax benefits during the years ended December 31, 2013, 2012 and 2011 from stock option exercises of $1.3 million, $1.2 million and $4.8 million, respectively. The total intrinsic value of stock...

  • Page 251
    ... using the market price of traded options on Western Union's common stock and the historical volatility of Western Union stock data. Prior to 2012, the Company's historical volatility represented a blend of Western Union and First Data (prior to the Spin-off) stock data. Expected term - For 2013...

  • Page 252
    ... five geographic regions whose functions are limited to generating, managing and maintaining agent relationships and localized marketing activities and also includes the Company's online money transfer service conducted through Western Union branded websites ("westernunion.com"). By means of common...

  • Page 253
    THE WESTERN UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following tables present the Company's reportable segment results for the years ended December 31, 2013, 2012 and 2011, respectively (in millions): Year Ended December 31, 2013 2012 2011 Revenues: Consumer-to-...

  • Page 254
    ...the Consumer-to-Business and Business Solutions segments is based upon the country where the transaction is initiated with 100% of the revenue allocated to that country. Long-lived assets, consisting of "Property and equipment, net," are presented based upon the location of the assets. 2013 FORM 10...

  • Page 255
    THE WESTERN UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) A significant majority of the Company's Consumer-to-Consumer transactions involve at least one non-United States location. Based on the method used to attribute revenue between countries described in the paragraph above...

  • Page 256
    ...WESTERN UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 18. Quarterly Financial Information (Unaudited) Summarized quarterly results for the years ended December 31, 2013 and 2012 were as follows (in millions, except per share data): Year Ended December 31, 2013 2013 by Quarter...

  • Page 257
    THE WESTERN UNION COMPANY SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT The following lists the condensed financial information for the parent company as of December 31, 2013 and 2012 and statements of income and comprehensive income and cash flows for each of the three years in the...

  • Page 258
    THE WESTERN UNION COMPANY CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (PARENT COMPANY ONLY) (in millions) For the Years Ended December 31, 2013 2012 2011 Revenues ...$ Expenses ...Operating income ...Interest income ...Interest expense...Other expense ...Loss before equity in earnings ...

  • Page 259
    THE WESTERN UNION COMPANY CONDENSED STATEMENTS OF CASH FLOWS (PARENT COMPANY ONLY) (in millions) For the Years Ended December 31, 2013 2012 2011 Cash flows from operating activities Net cash provided by operating activities ...$ Cash flows from investing activities Purchases of property and ...

  • Page 260
    ...December 31, 2013 and 2012. The Parent's subsidiaries periodically distribute excess cash balances to the Parent in the form of a dividend, although the amounts of such dividends may vary from year to year. The Parent files a consolidated United States federal income tax return, and also a number of...

  • Page 261
    ... rules and forms of the Securities and Exchange Commission, and are designed to ensure that information required to be disclosed by us in the reports that we file or submit are accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer...

  • Page 262
    ... in "Stock Beneficially Owned by Directors, Executive Officers and Our Largest Stockholders," and "Equity Compensation Plan Information" of our definitive proxy statement for the 2014 annual meeting of stockholders. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE...

  • Page 263
    ... Annual Report on Form 10-K); 2. Financial Statement Schedule (See Index to Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K); 3. The exhibits listed in the "Exhibit Index" attached to this Annual Report on Form 10-K. 2013...

  • Page 264
    ... duly authorized. The Western Union Company (Registrant) February 24, 2014 By: HIKMET ERSEK Hikmet Ersek President and Chief Executive Officer /S / Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the...

  • Page 265
    ...by reference thereto). Supplemental Indenture, dated as of September 29, 2006, among The Western Union Company, First Financial Management Corporation and Wells Fargo Bank, National Association, as trustee (filed as Exhibit 4.3 to the Company's Current Report on Form 8-K filed on October 2, 2006 and...

  • Page 266
    ...). Settlement Agreement, dated as of February 11, 2010, by and between Western Union Financial Services, Inc. and the State of Arizona (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on February 16, 2010 and incorporated herein by reference thereto). Order Tolling Time...

  • Page 267
    ...United States Under The Western Union Company 2006 Non-Employee Director Equity Compensation Plan (filed as Exhibit 10.5 to the Company's Quarterly Report on Form 10-Q filed on May 6, 2010 and incorporated herein by reference thereto).* Form of Nonqualified Stock Option Award Agreement for Executive...

  • Page 268
    ... Exhibit 10.43 to the Company's Annual Report on Form 10-K filed on February 24, 2012 and incorporated herein by reference thereto).* Credit Agreement, dated as of September 23, 2011, among The Western Union Company, the banks named therein, as lenders, Wells Fargo Bank, National Association, in its...

  • Page 269
    ...Senior Executive Annual Incentive Plan for 2013.* Form of Bonus Stock Unit Award Agreement for Non-Employee Directors Residing in the United States Under The Western Union Company 2006 Long-Term Incentive Plan (filed as Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q filed on May 1, 2012...

  • Page 270
    ... Extension Definition Linkbase Document XBRL Taxonomy Extension Label Linkbase Document XBRL Taxonomy Extension Presentation Linkbase Document * Management contracts and compensatory plans and arrangements required to be filed as exhibits pursuant to Item 15(b) of this report. 2013 FORM 10-K 160

  • Page 271
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  • Page 272
    ... Holdings Inc. SOLOMON D. TRUJILLO HIKMET ERSEK President, Chief Executive Officer, Director, and non-voting member of the Compliance Committee The Western Union Company ROBERTO G. MENDOZA Director, member of the Audit Committee and the Compensation and Benefits Committee Senior Managing Director...

  • Page 273
    ... The annual meeting of stockholders of The Western Union Company will be held at 505 Fifth Avenue, 7th Floor, New York, NY 10017 on Friday, May 16, 2014 at 8 a.m. local time. 100 50 0 2008 2009 2010 2011 2012 2013 TRADEMARKS, SERVICE MARKS AND TRADE NAMES The Western Union name, logo and related...

  • Page 274
    12500 East Belford Avenue Englewood, CO 80112, USA wu.com