Western Union 2013 Annual Report Download - page 52

Compensation Discussion and Analysis PROXY STATEMENT
The Western Union Company – Proxy Statement | 34
NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT
2013 Say On Pay Vote
As noted above, in its compensation review process, the
committee considers whether the Company’s executive
compensation and benefits program serves the interests
of the Company’s stockholders. In that respect, as part
of its on-going review of the Company’s executive
compensation program, the Compensation Committee
considered the approval by more than 97% of the
votes cast for the Company’s “say on pay” vote at the
Company’s 2013 Annual Meeting of Stockholders. The
committee determined that the Company’s executive
compensation philosophy, compensation objectives, and
compensation elements continued to be appropriate and
did not make any specific changes to the Company’s
executive compensation program in response to the 2013
“say on pay” vote.
Stockholder Engagement
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
as of December 31, 2013. The committee and management found the discussions to be very helpful in their ongoing
evaluation of the Company’s executive compensation program, and intend to continue to obtain this feedback in
the future.
2014 Plan Design
As part of its ongoing review of the executive compensation program during 2013, and based on input from the
Compensation Committee’s compensation consultant and the stockholder feedback described above, the Compensation
Committee determined that several compensation program elements would be implemented in 2014 in order to further
enhance the Company’s pay-for-performance philosophy and further align the interests of executives with those of our
stockholders. Accordingly, in February 2014, the Compensation Committee approved such elements including the following:
•฀ Created Standalone TSR Performance-Based Restricted Stock Units: We replaced the TSR modifier from our
2013 Long-Term Incentive Plan design with a standalone relative TSR metric in order to enhance focus on stockholder
returns. These performance-based restricted stock units require the Company to achieve 60th percentile relative TSR
performance versus the S&P 500 Index over a three-year performance period in order to earn target payout, with
30th percentile relative TSR performance resulting in threshold payout and 90th percentile relative TSR resulting in
maximum payout.
•฀ Increased Performance Period for Performance-Based Restricted Stock Units: We increased the performance
period of our financial performance-based restricted stock units so that they will be subject to a three-year total
performance period, versus the two-year performance period used in prior years.
•฀ Diversified Long-Term Incentive Plan Mix and Increased Weighting of At-Risk Awards: We increased the
percentage of our annual equity grants that has vesting provisions that are strictly performance-based and are at-
risk. For 2014, awards under the Long-Term Incentive Plan will consist of 80% performance-based restricted stock
units (60% financial performance-based restricted stock units (incorporating both revenue growth and profit) and
20% TSR performance-based restricted stock units) and 20% stock options, as compared to 67% performance-
based restricted stock units and 33% stock options in 2013.
• Established Goals Exceeding Performance During Prior Three Years: The financial performance target
objectives for the 2014 compensation program are set at constant currency growth rates that are higher than the
Company’s average annual constant currency results achieved over 2011 through 2013. The 2014 Annual Incentive
Plan financial performance target objectives are also set higher than the constant currency financial performance target
objectives and actual results under the 2013 Annual Incentive Plan. (Target objectives are not projections of future
performance.) For the 2014 Annual Incentive Plan, performance at 184% of the target revenue growth rate and at
200% of the target operating income growth rate is required for a maximum payout equal to 150% of the target award.
Further, the Company’s relative TSR performance rank versus the S&P 500 Index over a 2014-2016 performance period
that is required to earn a target payout under the terms of the 2014 TSR performance-based restricted stock units is
higher than the Company’s annual relative TSR performance versus the S&P 500 Index in each of 2011, 2012, and 2013.