Western Union 2013 Annual Report Download - page 55

Compensation Discussion and Analysis PROXY STATEMENT
37 | The Western Union Company – Proxy Statement
NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT
• PerformsanannualriskassessmentoftheCompany’s
compensation programs, as described in the “Executive
Compensation-Risk Management and Compensation”
section of this Proxy Statement.
The Compensation Consultant does not provide any other
services to the Company. The Compensation Committee
has assessed the independence of the Compensation
Consultant pursuant to the NYSE rules and the Company
concluded that the Compensation Consultant’s work for
the Compensation Committee did not raise any conflict
of interest.
During 2013, the Company also retained the services of
Towers Watson to assist the Company in evaluating the
Company’s annual and long-term incentive programs.
Specifically, Towers Watson was instructed to review the
incentive design to assist the Company in developing
a program that would increase the executives’ focus
on growth, strategic business drivers and individual
accountability. The Compensation Committee evaluated
the findings of Towers Watson in its review of the
2013 incentive program design. The Compensation
Committee has assessed the independence of Towers
Watson pursuant to the NYSE rules and the Company
concluded that Towers Watson’s work did not raise any
conflict of interest.
Setting 2013 Compensation
In late 2012, the Compensation Committee, working with
the Compensation Consultant and the Chief Executive
Officer, engaged in a detailed review of the Company’s
executive compensation programs to evaluate whether the
design and levels of each compensation element were:
• AppropriatetosupporttheCompany’sstrategic
performance objectives;
• Consistentwiththephilosophyandobjectivesdescribed
under “-Our Executive Compensation Philosophy and
Objectives” above; and
• Reasonablewhencomparedtomarketpaypractices
(see “-Market Comparison” below).
Specifically in evaluating the 2013 design of the
Company’s executive compensation programs, the
Compensation Committee considered that many of
the strategic actions implemented by the Company in
2013 were designed to position the Company for future
growth, and were expected to have a negative impact
on 2013 financial performance. For 2013, a number
of changes were made to the Company’s executive
compensation program to further align the program
with the Company’s mid- and long-term operating plans,
increase participant accountability, and drive motivation
and retention beyond 2013. These changes included:
• ModifyingtheCompany’sAnnual Incentive Plan
design to include individual and/or business unit
performance objectives;
• AddingarestrictedstockunitawardtotheAnnual
Incentive Plan to be granted based on the achievement
of strategic objectives and a threshold operating income
goal; and
• ModifyingtheLong-Term Incentive Plan design to
include 2013 and 2014 financial performance metrics
while still maintaining a longer-term perspective in the
program with a TSR payout modifier.
In early 2013, Mr. Ersek presented to the Compensation
Committee his evaluation of each of the then serving
Executive Vice Presidents and the level of his or her salary,
annual bonus targets under the Annual Incentive Plan,
and long-term incentive award targets under the Long-
Term Incentive Plan. Mr. Ersek based his assessments on
each executive’s performance and relative contributions
to the Company’s success, the performance of the
executive’s respective business unit or functional area,
employee retention considerations, compensation history
and internal equity. Mr. Ersek also reviewed with the
committee tally sheets that presented comprehensive
historical and current compensation data for each of
the Company’s executive officers. Please see “-Use of
Tally Sheets” below for a description of this tool. The
Compensation Consultant participated in the committee
meetings to provide peer group and market data regarding
executive compensation. Please see “-Market Comparison”
for a discussion of the use of peer group and market data.
In early 2013, Mr. Ersek also submitted a self-evaluation
to the Compensation Committee. The committee shared
Mr. Ersek’s goals for the year and his self-evaluation with
the independent members of 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