Western Union 2013 Annual Report Download - page 64

Compensation Discussion and Analysis PROXY STATEMENT
The Western Union Company – Proxy Statement | 46
NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT
with Section 162(m) of the Internal Revenue Code, the
Compensation Committee retained discretion to adjust the
performance results against the performance objectives
for major nonrecurring and non-operating expense and
income items based on the facts and circumstances
involved. Accordingly, for 2013, the committee approved
adjustments to reflect a reclassification relating to
certain interest income from Argentina and certain costs
associated with productivity and cost-savings initiatives.
These adjustments resulted in a modification to the payout
calculation of one percentage point.
Individual and Business Unit Performance Objectives. As
noted above, other than for Mr. Ersek, a portion of the
cash component of the 2013 annual incentive awards
was subject to the achievement of individual and/or,
business unit performance objectives. These objectives
varied by named executive officer and included: increase
in new investor ownership; operating cash flow objectives;
total Company expenses as compared to the Company’s
operating plan objectives; regulatory and compliance
initiatives; execution of various information technology
infrastructure projects; customer growth; cost savings
initiatives; and fraud prevention objectives. In the case of
Mr. Agrawal, his individual/business unit objectives were
based on Western Union Business Solutions and included:
existing and new revenue growth; revenue retention;
customer growth; and EBITDA growth. Weighting for
each individual and business unit performance objective
ranged from 10% to 30% of the cash component bonus
opportunity allocated to individual and/or business unit
performance. The committee believes the performance
objectives established for each of the named executive
officers are indicators of the executive’s success in
fulfilling the executive’s responsibilities to the Company
and support the Company’s strategic operating plan.
The performance levels of the objectives were designed
to be achievable, but required strong and consistent
performance by the executive. Please see “-Compensation
of Our Named Executive Officers” for a discussion of
the annual incentive payouts received by each named
executive officer, including a discussion of the individual
performance factors considered by the committee in
determining each named executive officer’s payout levels.
Strategic Performance Objectives. Participants in the 2013
Annual Incentive Plan had an opportunity to receive a
restricted stock unit award, with the value of the restricted
stock unit award ranging from 0% to 75% of target for
various levels of achievement of strategic performance
objectives. In the event the Company failed to achieve the
2013 strategic objectives, the cash component of the 2013
annual incentive awards would be reduced by up to 25%.
Achievement of the Company’s internal operating plan
for these strategic objectives would result in a restricted
stock unit payout equal to 25% of target and maximum
achievement of these strategic objectives would result in
a restricted stock unit payout equal to 75% of target. This
program design was also intended to drive motivation
and retention beyond 2013 by delivering the award as
restricted stock units. The restricted stock units will vest
in increments of 30% and 70%, respectively, on the first
and second anniversaries of the grant date, subject to
continued employment on each such vesting date and the
Company’s achievement of a 2014 threshold operating
income goal of $500 million.
The committee established the performance 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.