Western Union 2013 Annual Report Download - page 71

53 | The Western Union Company – Proxy Statement
NOTICE OF 2014 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT
Compensation Discussion and Analysis PROXY STATEMENT
Clawback Policy
The Board of Directors adopted a clawback policy in
2009. Under the policy, the Company may, in the Board’s
discretion and subject to applicable law, recover incentive
compensation paid to an executive officer of the Company
(defined as an individual subject to Section 16 of the
Exchange Act, at the time the incentive compensation
was received by or paid to the officer) if the compensation
resulted from any financial result or performance metric
impacted by the executive officer’s misconduct or fraud.
The Board is monitoring this policy to ensure that it is
consistent with applicable laws, including any requirements
under the Dodd-Frank Wall Street Reform and Consumer
Protection Act (the “Dodd-Frank Act“).
Tax Implications of Executive Compensation Program
Under Section 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 requirements
are met. The Compensation Committee structures
compensation to take advantage of this exemption under
Section 162(m) to the extent practicable, while satisfying
the Company’s compensation policies and objectives.
Because the Compensation Committee also recognizes the
need to retain flexibility to make compensation decisions
that may not meet the standards of Section 162(m) when
necessary to enable the Company to continue to attract,
retain, and motivate highly-qualified executives, it reserves
the authority to approve potentially non-deductible
compensation in appropriate circumstances.
Compensation of Our Named Executive Officers
This section describes the compensation paid to or
earned by our named executive officers during 2013.
In establishing the 2013 compensation levels for our
named executive officers, the committee relied on
the philosophy, objectives, and procedures set forth
above under “-Establishing and Evaluating Executive
Compensation,” including the committee’s review
of market data and consideration of the input of the
Compensation Consultant.
Hikmet Ersek
President and Chief Executive Officer
Mr. Ersek’s 2013 compensation was weighted significantly
toward variable and performance-based incentive pay
over fixed pay, and long-term, equity-based pay over
annual cash compensation, because the Compensation
Committee desired to tie a significant level of Mr. Ersek’s
compensation to the performance of the Company.
The percentage of compensation delivered in the form
of performance-based compensation is higher for
Mr. Ersek than compared to the other named executive
officers because the Compensation Committee believes
that the Chief Executive Officer’s leadership is one of
the key drivers of the Company’s success, and that a
greater percentage of the Chief Executive Officer’s total
compensation should be variable as a reflection of the
Company’s level of performance. Market data provided
by the Compensation Consultant supported this practice
as well. Accordingly, at target-level performance for 2013,
Mr. Ersek’s annual compensation was weighted 12% base
salary, 17% annual incentive award, and 71% long-term
incentive award. Approximately 88% of Mr. Ersek’s 2013
targeted total annual compensation varies based on the
Company’s performance.
In February 2013, the Compensation Committee set
Mr. Ersek’s 2013 compensation levels, including his
annual and long-term incentive award targets, as
discussed below. In determining Mr. Ersek’s 2013 target
compensation levels, the committee considered Mr. Ersek’s
2012 performance and the market data. Mr. Ersek’s