Western Union 2014 Annual Report Download

Download and view the complete annual report

Please find the complete 2014 Western Union annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 306

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176
  • 177
  • 178
  • 179
  • 180
  • 181
  • 182
  • 183
  • 184
  • 185
  • 186
  • 187
  • 188
  • 189
  • 190
  • 191
  • 192
  • 193
  • 194
  • 195
  • 196
  • 197
  • 198
  • 199
  • 200
  • 201
  • 202
  • 203
  • 204
  • 205
  • 206
  • 207
  • 208
  • 209
  • 210
  • 211
  • 212
  • 213
  • 214
  • 215
  • 216
  • 217
  • 218
  • 219
  • 220
  • 221
  • 222
  • 223
  • 224
  • 225
  • 226
  • 227
  • 228
  • 229
  • 230
  • 231
  • 232
  • 233
  • 234
  • 235
  • 236
  • 237
  • 238
  • 239
  • 240
  • 241
  • 242
  • 243
  • 244
  • 245
  • 246
  • 247
  • 248
  • 249
  • 250
  • 251
  • 252
  • 253
  • 254
  • 255
  • 256
  • 257
  • 258
  • 259
  • 260
  • 261
  • 262
  • 263
  • 264
  • 265
  • 266
  • 267
  • 268
  • 269
  • 270
  • 271
  • 272
  • 273
  • 274
  • 275
  • 276
  • 277
  • 278
  • 279
  • 280
  • 281
  • 282
  • 283
  • 284
  • 285
  • 286
  • 287
  • 288
  • 289
  • 290
  • 291
  • 292
  • 293
  • 294
  • 295
  • 296
  • 297
  • 298
  • 299
  • 300
  • 301
  • 302
  • 303
  • 304
  • 305
  • 306

N
O
TI
C
E
O
F
2
015 ANNUAL MEETING OF STOCKHOLDERS
,
P
R
O
XY
S
TATEMENT
&
2014 ANNUAL REP
O
R
T

Table of contents

  • Page 1
    N OT I CE O F 2015 ANNUAL ME ET I N G O F STO C K HO L D E RS, PROXY STATE ME N T & 2 014 A N N UA L R E P O RT

  • Page 2
    REVENUE INCREASE IN WU.COM MONEY TRANSFER REVENUES AVERAGE TRANSACTIONS PER SECOND $ 5.6 BILLION 28 % 30 *Compared to a 24% increase in wu.com money transfer revenues in 2013. In 2014, wu.com money transfer revenues represented 4% of The Western Union Company's total revenue.

  • Page 3
    ... directly from the U.S., U.K., France, Germany and Australia to select banks in India. Our money transfer services are available to customers at more than 100,000 ATMs and self-service kiosks worldwide. We continue to offer access through mobile phones, and we now have 17 mobile-phone partners...

  • Page 4
    ...times a second, people come to Western Union with a need-to help a relative, to fund an education, to increase inventory, to pay a bill. Western Union connects all of them with opportunities and access few other companies can match. Our transformational strategy and plans for innovation-put in place...

  • Page 5
    MOVING MONEY FOR BETTER NOT I CE OF 2 015 A N N UA L MEET I NG OF STOCKHOL DERS, P ROX Y STAT EMENT & 2 014 ANNUAL REPORT NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT

  • Page 6

  • Page 7
    ... business to be conducted at the Annual Meeting. In addition, the Company's 2014 Annual Report, which is being made available to you along with the Proxy Statement, contains information about the Company and its performance. Directors and officers of the Company will be present at the Annual Meeting...

  • Page 8
    (This page has been left blank intentionally.)

  • Page 9
    ...'s Board of Directors until the Company's 2016 Annual Meeting of Stockholders. Hold an advisory vote to approve executive compensation. Approve The Western Union Company 2015 Long-Term Incentive Plan (the "2015 Plan"). Ratify the selection of Ernst & Young LLP as our independent registered public...

  • Page 10
    ..., 2015. By Order of the Board of Directors NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT John R. Dye Executive Vice President, General Counsel and Secretary April 1, 2015 YOUR VOTE IS IMPORTANT PLEASE PROMPTLY VOTE BY TELEPHONE OR INTERNET, OR REQUEST A PROXY CARD TO COMPLETE...

  • Page 11
    ... Director Meetings ...Nomination of Directors ...Submission of Stockholder Proposals...Code of Ethics ... NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT Compensation of Directors ... Report of the Audit Committee ...Compensation and Benefits Committee Report ...Compensation...

  • Page 12
    ... or Change-in-Control Tables ...Risk Management and Compensation ... 58 58 59 60 61 63 66 66 67 69 72 73 NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT Proposal 2-Advisory Vote to Approve Executive Compensation ...Proposal 3-Approval of The Western Union Company 2015 Long-Term...

  • Page 13
    ... STATEMENT Meeting Agenda and Voting Matters Item Management Proposals 1 Election of Directors 2 3 4 Advisory Vote to Approve Executive Compensation Approval of The Western Union Company 2015 Long-Term Incentive Plan Ratify the Selection of Ernst & Young LLP as our independent registered public...

  • Page 14
    ...2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT Information about our Board and Committees (Page 7) Number of Number of Meetings Members Independence During Fiscal Year 2014 11 91% 8 4 100% 8 5 100% 6 4 100% 4 5 100% of voting members 10 Full Board Audit Committee Compensation and Benefits...

  • Page 15
    ... a change-in-control, severance benefits are üMaximum payout caps for annual cash incentive compensation and performance-based restricted stock unit awards. ü"Clawback" Policy. The Company may recover incentive compensation paid to an executive officer that was calculated based upon any financial...

  • Page 16
    ...Executive Severance Policy") to reduce the severance multiple for determining severance benefits prior to a change-in-control from 2 to 1.5 for participants other than the Company's Chief Executive Officer. NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT The Western Union Company...

  • Page 17
    ... stock unit awards and stock price appreciation. NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT CHIEF EXECUTIVE OFFICER 2014 TOTAL DIRECT COMPENSATION 12% 71% 17% Long-Term Equity Compensation Base Salary Annual Incentive v | The Western Union Company - Proxy Statement

  • Page 18
    ... The Financial PSUs and the 2013 performance-based restricted stock unit awards are valued for purposes of this table based on estimated performance as of December 31, 2014. Closing stock price as of December 31 for each year reported. (2) (3) (4) The Western Union Company - Proxy Statement | vi

  • Page 19
    ...a copy of the Company's Annual Report on Form 10-K for the year ended December 31, 2014 that was filed with the SEC, without charge, by writing to Investor Relations, The Western Union Company, 12500 East Belford Avenue, Mailstop M23IR, Englewood, CO 80112. If you would like to receive a copy of any...

  • Page 20
    .... Our stockholders are invited to attend the Annual Meeting and are requested to vote on the proposals described in this Proxy Statement. This means you hold shares of the Company in more than one way. For example, you may own some shares directly as a "Registered Holder" and other shares through...

  • Page 21
    ...person at the Annual Meeting only if you obtain a legal proxy 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...

  • Page 22
    ... will be a plurality of the shares represented in person or by proxy at any such meeting and entitled to vote on the election of directors. The advisory vote to approve executive compensation (Proposal 2), approval of The Western Union Company's 2015 Long-Term Incentive Plan (Proposal 3), 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 | 6

  • Page 25
    ... AND SKILLS SUPPORTING DIRECTORSHIP POSITION ON THE COMPANY'S 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...

  • Page 26
    ...Age 66 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 manufactures, markets, and...

  • Page 27
    ...Corporation, Diageo plc., and Time, Inc. Ms. Holden's term expires in 2015. Age 59 Director Since 2006 EXPERIENCE, QUALIFICATIONS, ATTRIBUTES AND SKILLS SUPPORTING DIRECTORSHIP POSITION ON THE COMPANY'S BOARD* Ms. Holden brings to the Board experience as a chief executive officer of a large United...

  • Page 28
    ... her time as a venture capital investor. Each of these areas is central to the Company's business. Ms. Fayne Levinson also has substantial experience with respect to executive compensation matters and corporate governance. NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT Roberto...

  • Page 29
    ...' term expires in 2015. NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT Age 53 Director Since 2006 EXPERIENCE, QUALIFICATIONS, ATTRIBUTES AND SKILLS SUPPORTING DIRECTORSHIP POSITION ON THE COMPANY'S BOARD* Mr. Miles has experience as an executive of an international consumer...

  • Page 30
    .... until 2014. Ms. Fragos Townsend's term expires in 2015. Age 53 Director Since 2013 EXPERIENCE, QUALIFICATIONS, ATTRIBUTES AND SKILLS SUPPORTING DIRECTORSHIP POSITION ON THE COMPANY'S BOARD* Ms. Fragos Townsend has extensive public policy, government, legal, and regulatory experience, and brings to...

  • Page 31
    ... and ProAmerica Bank. Mr. Trujillo's term expires in 2015. Age 63 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
    ... provided to illustrate the skills and qualifications of our Directors and Director Nominee. Leadership Financial International Diversity NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT Director/ Director Nominee Dinyar S. Devitre Hikmet Ersek Richard A. Goodman Jack M. Greenberg...

  • Page 33
    ... to the Corporate Governance and Public Policy Committee by non-employee members of the Board of Directors. Except for Mr. Devitre, who has declined to stand for re-election, the terms of each director if re-elected or elected will expire at the 2016 Annual Meeting of Stockholders. In the case of...

  • Page 34
    ... Western Union Executive Compensation Program- Prohibition Against Pledging and Hedging of the Company's Securities," the Company's insider trading policy prohibits the Company's executive officers and directors from pledging the Company's securities or engaging in hedging or short-term speculative...

  • Page 35
    ... 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 36
    ...evaluation and management of risk related to the Company's compliance programs and policies associated with anti-money laundering laws, including investigations or other matters that may arise in relation to such laws, the Board formed a Compliance Committee in 2013 to assist the Audit Committee and...

  • Page 37
    ... Board. The Company's Audit Committee Charter, Compensation and Benefits Committee Charter, Corporate Governance and Public Policy Committee Charter, Compliance Committee Charter, and Corporate Governance Guidelines are available without charge through the "Investor Relations, Corporate Governance...

  • Page 38
    ..., the Audit Committee assists the Board of Directors in fulfilling its oversight responsibilities with respect to: s¬ INTEGRITY¬OF¬THE¬#OMPANYS¬CONSOLIDATED¬FINANCIAL¬STATEMENTS s¬ COMPLIANCE¬WITH¬LEGAL¬AND¬REGULATORY¬REQUIREMENTS s¬ INDEPENDENT¬REGISTERED¬PUBLIC¬ACCOUNTING¬FIRM...

  • Page 39
    ...¬AGREEMENTS¬WITH¬THE¬ Company's Chief Executive Officer or to any person being considered for promotion or hire into the position of Chief Executive Officer; s¬ ¬ APPROVING¬GRANTS¬ANDOR¬AWARDS¬OF¬OPTIONS ¬RESTRICTED¬STOCK ¬RESTRICTED¬STOCK¬UNITS ¬AND¬OTHER¬FORMS¬OF¬EQUITY...

  • Page 40
    ... the Board's oversight responsibility for the Company's compliance with legal and regulatory requirements. Among other things, the Compliance Committee is responsible for reviewing: s¬ T ¬ HE¬#OMPANYS¬COMPLIANCE¬PROGRAMS¬AND¬POLICIES¬RELATING¬TO¬ANTI MONEY¬LAUNDERING¬LAWS ¬INCLUDING...

  • Page 41
    ... member of the Corporate Governance and Public Policy Committee meets the independence requirements of our Corporate Governance Guidelines, the NYSE and the Exchange Act, and as the Board has determined, has no material relationship with the Company. 23 | The Western Union Company - Proxy Statement

  • Page 42
    ... Chairperson of the Corporate Governance and Public Policy Committee unless the communication is specifically addressed to another member of the Board, in which case, the communication will be forwarded to that director. Board Attendance at Annual Stockholders' Meeting Although the Company does not...

  • Page 43
    ... meeting should be directed to the Corporate Secretary, The Western Union Company, 12500 East Belford Avenue, Mailstop M21A2, Englewood, CO 80112. Code of Ethics The Company's Director's Code of Conduct, Code of Ethics for Senior Financial Officers, Reporting Procedure for Accounting and Auditing...

  • Page 44
    .... Mr. Ersek, our President and Chief Executive Officer, does not receive additional compensation for his service as a director. 2014 DIRECTOR COMPENSATION Fees Earned or Paid in Cash ($000) 125.0 115.4 110.0 110.0 95.0 95.0 95.0(1) 32.0 38.8(1) 96.5 85.0 Stock Awards ($000) (2) 175.0 130.0 65.0 130...

  • Page 45
    ... Board. Equity Compensation The 2014 outside director equity awards were granted pursuant to our Long-Term Incentive Plan. All director equity awards will be settled in shares of Common Stock. The purpose of these awards is to advance the interest 27 | The Western Union Company - Proxy Statement

  • Page 46
    ... 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, shares...

  • Page 47
    ... statements with United States generally accepted accounting principles. The Company's independent registered public accounting firm is also responsible for expressing an opinion on the effectiveness of the Company's internal control over financial reporting. During fiscal year 2014, the Audit...

  • Page 48
    ... relating to critical accounting policies. In reliance on the review and discussions described above, we 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, 2014 for filing...

  • Page 49
    ...'s Proxy Statement and its Annual Report on Form 10-K. Compensation and Benefits Committee Betsy D. Holden (Chairperson) Richard A. Goodman Roberto G. Mendoza Robert W. Selander Solomon D. Trujillo NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT 31 | The Western Union Company...

  • Page 50
    ... on digital expansion; driving accelerated growth in Western Union Business Solutions; and generating and deploying strong cash flow for our stockholders. The performance goals and objectives under our annual incentive and long-term incentive programs were designed to support these strategies...

  • Page 51
    ... unit components under the Long-Term Incentive Plan). Pay is based on the annual base salary and target incentive opportunities applicable to Mr. Ersek as of December 31, 2014. NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT CHIEF EXECUTIVE OFFICER 2014 TOTAL DIRECT COMPENSATION...

  • Page 52
    ... 31, 2014 against the financial performance objectives under the Company's 2013 and 2014 performance-based restricted stock unit awards and stock price appreciation. NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT 2014 Chief Executive Officer Total Reported Compensation Versus...

  • Page 53
    ...objectives designed to create long-term stockholder value and to hold executives accountable for their individual performance and the performance of the Company. our named executive officers were in the form of equity-based compensation. üEmphasis on future pay opportunity vs. current pay. In 2014...

  • Page 54
    ... PROXY STATEMENT Company's 2014 Annual Meeting of Stockholders. After considering the 2014 "say on pay" results as well as the positive feedback received during the Company's stockholder engagement efforts, the committee determined that the Company's executive compensation philosophy, compensation...

  • Page 55
    ... the information presented in the "Executive Compensation" section of this Proxy Statement. For 2014, the named executive officers were: Hikmet Ersek - President and Chief Executive Officer (September 2010 to present) Rajesh K. Agrawal - Executive Vice President and Interim Chief Financial Officer...

  • Page 56
    ... Chief Executive Officer attended all but one, of the meetings of the Compensation Committee in 2014 to contribute to and understand the committee's oversight of and decisions relating to executive compensation. The Chief Executive Officer did not attend The Western Union Company - Proxy Statement...

  • Page 57
    ... 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. 39 | The Western Union Company - Proxy Statement

  • Page 58
    ... due to the size of their revenue, operating income and market capitalization in relation to the Company. The revised peer group was used for evaluating 2014 compensation decisions. NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT The Western Union Company - Proxy Statement | 40

  • Page 59
    ..., the location of the company, and the positions under review. Survey data provides insight into positions that may not generally be reported in proxy statements and information about the compensation of executives of non-public companies. In some instances, survey data is a useful complement to...

  • Page 60
    ...2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT The Western Union Executive Compensation Program Pay-For-Performance The principal components of the Company's annual executive compensation program are annual base salary, annual incentive awards, and long-term incentive awards in the form of...

  • Page 61
    ...CHIEF EXECUTIVE OFFICER 2014 TOTAL DIRECT COMPENSATION NAMED EXECUTIVE OFFICERS 2014 TOTAL DIRECT COMPENSATION 12% 25% NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT 71% 17% 54% 21% Long-Term Equity Compensation Base Salary Annual Incentive Long-Term Equity Compensation...

  • Page 62
    ... balances fixed and variable compensation elements, provides alignment with the Company's short and long-term financial and strategic priorities through the annual and long-term incentive programs, and provides alignment with stockholder interests. The Western Union Company - Proxy Statement | 44

  • Page 63
    ...% of target for the named executive officers. See pages 46-49 and 54-56. NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT Annual incentive awards Internal pay equity, market practice and individual performance. Participants are eligible to receive a cash payout ranging from 0% to...

  • Page 64
    ... ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT Restricted stock units Internal pay equity, market practice and individual performance. Four of our named executive officers received restricted stock unit grants. See pages 49-51 and 54-56. Each of Western Union's 2014 executive compensation...

  • Page 65
    .../business unit measures used in determining the cash payout levels. For 2014, Messrs. Agrawal and Almeida received increases in their target award opportunities in connection with PROXY STATEMENT their respective promotions. Each of our other named executive officer's target award opportunity...

  • Page 66
    ... cash flow, expense management, business unit revenue growth, business unit profit growth, business The Western Union Company - Proxy Statement unit profit margin, execution of various information technology projects, customer satisfaction with customer service center support, compliance costs...

  • Page 67
    ... received by each named executive officer. Long-Term Incentive Compensation The Long-Term Incentive Plan allows the Compensation Committee to award various forms of long-term incentive grants, including stock options, restricted stock units, performance-based equity and performance-based cash awards...

  • Page 68
    .... In February 2014, the Compensation Committee granted the Chief Executive Officer and the Executive Vice Presidents long-term incentive awards under the Long-Term Incentive Plan. The awards consisted of 80% performance-based restricted stock units (60% Financial PSUs, incorporating both revenue and...

  • Page 69
    ... plan) Severance and Change-in-Control Benefits Health and Welfare Benefits Limited Perquisites Severance and Change-in-Control Benefits. Western Union has an executive severance policy for our executive officers. The policy helps accomplish Western Union's compensation philosophy of attracting and...

  • Page 70
    ... other than the Company's Chief Executive Officer. This amendment was approved after considering input from the Compensation Consultant as well as market data. In addition, the Executive Severance Policy prohibits excise tax gross-up payments on change-in-control benefits for those individuals...

  • Page 71
    ... short sales or put or call options involving the Company's securities. 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...

  • Page 72
    ...annual and long-term incentive award targets, as discussed below. Mr. Ersek's compensation as Chief Executive Officer is set higher relative to the other named executive officers. The Compensation Committee considers this The Western Union Company - Proxy Statement to be appropriate, based on market...

  • Page 73
    ..., Americas and European Union, and market data. The committee increased Mr. Almeida's compensation levels, including his long-term incentive award, to reflect his increased responsibilities and to bring his total compensation into closer alignment with the Company's other executive officers as well...

  • Page 74
    ... Thompson Executive Vice President, Global Operations and Chief Information Officer In February 2014, the Compensation Committee set Mr. Thompson's 2014 compensation levels, including his annual and long-term incentive award targets, as discussed below. • Base Salary. For 2014, no changes were...

  • Page 75
    ... STATEMENT officers. In setting executive compensation levels for 2015, the committee considered a number of factors including peer group and survey data, individual characteristics and responsibilities, and the Company's financial performance in 2014. NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS...

  • Page 76
    ...'s salary adjustment was effective as of January 1, 2014. The amounts reported in these columns for 2014 represent the annual equity grants to the named executive officers under the Long-Term Incentive Plan and time-based restricted stock unit awards granted to Messrs. Agrawal, Almeida, Thompson and...

  • Page 77
    Executive Compensation (5) PROXY STATEMENT For 2014, Mr. Ersek's salary is denominated in United States dollars but is paid to or on behalf of Mr. Ersek in euros, based on a conversion rate that was determined each calendar quarter. Contributions made to the Austrian retirement plan on behalf of ...

  • Page 78
    ... by each named executive officer is included in the Non-Equity Incentive Plan Compensation column in the 2014 Summary Compensation Table. Please see "Compensation Discussion and Analysis" for further information regarding the Annual Incentive Plan. The Western Union Company - Proxy Statement | 60

  • Page 79
    ... the position of Executive Vice President and Chief Financial Officer, Mr. Agrawal's target award opportunity was increased from $405,000 to $495,000. The amount reported in the table reflects Mr. Agrawal's prorated award opportunity for 2014. (3) NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND...

  • Page 80
    ...employment from Western Union. Please see the "-Potential Payments Upon Termination or Change-inControl" section for a description of the policy. Awards In February 2014, the Compensation Committee granted the Chief Executive Officer and the Executive Vice Presidents long-term incentive awards under...

  • Page 81
    ... stock awards held by each of the named executive officers on December 31, 2014. 2014 Outstanding Equity Awards at Fiscal Year-End Table NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT Option Awards Stock Awards Equity Incentive Plan Awards: Number of Unearned Shares, Units...

  • Page 82
    Executive Compensation Footnotes: (1) PROXY STATEMENT Grants prior to September 29, 2006 represent option awards granted to the named executive officer under the 2002 First Data Corporation Long Term Incentive Plan that were replaced with substitute Western Union options that were adjusted to ...

  • Page 83
    ... stock units will be determined after the conclusion of the 2013-2015 performance period based on the Company's TSR performance relative to the S&P 500 Index over that period. NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT 65 | The Western Union Company - Proxy Statement

  • Page 84
    ...provides information concerning each exercise of stock options and each vesting of stock during 2014 for each of the named executive officers. 2014 Option Exercises and Stock Vested Table NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT Option Awards Number of Shares Value Acquired...

  • Page 85
    ...2015 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 86
    ... for 24 months (36 months in the case of the Chief Executive Officer) after the senior executive's termination (but not beyond their original terms). • If a senior executive is involuntarily terminated without cause and no change-in-control has occurred, awards granted pursuant to our Long-Term...

  • Page 87
    ... terms of our equity awards include retirementvesting provisions, none of our current named executive officers are retirement eligible. NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT Payments Upon Termination or Change-in-Control Tables TERMINATION FOLLOWING A CHANGE-IN-CONTROL...

  • Page 88
    ...incentive awards to be received upon a termination or a change-in-control calculated in accordance with the Executive Severance Policy and the Long-Term Incentive Plan. In the case of stock grants, the equity value represents the value of the shares (determined by multiplying the closing stock price...

  • Page 89
    ...for grants in 2012 and later, if termination occurs prior to the one year anniversary of the grant date, the awards are forfeited. NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT Vesting continues under normal terms. Prorated vesting by grant based on ratio of days since grant to...

  • Page 90
    ... opportunity equal to 150% of target. Our executives are also expected to meet share ownership guidelines in order to align the executives' interests with those of our stockholders. Also, the Company's clawback policy permits the Company to recover incentive compensation paid to an executive officer...

  • Page 91
    ... a change-in-control. ü Maximum payout caps for annual cash incentive compensation and performance-based restricted stock unit awards. ü "Clawback" Policy. ü Robust stock ownership guidelines. NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT 73 | The Western Union Company...

  • Page 92
    ... 2014, the Compensation Committee amended the Executive Severance Policy to reduce the severance multiple for determining severance benefits prior to a change-in-control from 2 to 1.5 for participants other than the Company's Chief Executive Officer. NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS...

  • Page 93
    ..., the Compensation Committee may take into account the outcome of the vote when considering future executive compensation arrangements. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR PROPOSAL 2. NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT 75 | The Western Union Company...

  • Page 94
    ... approved by the Board on February 20, 2015, subject to stockholder approval, and will replace The Western Union Company 2006 Long-Term Incentive Plan (the "2006 Plan"). As of December 31, 2014, there were approximately 37,556,580 shares of Common Stock that remained available for future issuances...

  • Page 95
    ... of the Board, the President and Chief Executive Officer or any other executive officer with regard to (y) awards to persons subject to Section 16 of the Exchange Act, or (z) any decision regarding the impact of a change in control on awards issued under the 2015 Plan. Available Shares Under the...

  • Page 96
    ... portion of fees received for service on the Board or any Board committee. On March 19, 2015, the closing sales price per share of Common Stock as reported on the NYSE was $19.25. Eligible Employees. Participants in the 2015 Plan will consist of such officers, other employees, non-employee directors...

  • Page 97
    ... Board. The Board may amend the 2015 Plan at any time, subject to stockholder approval if (i) required by applicable law, rule or regulation, including Section 162(m) of the Code, or any rule of the NYSE, (ii) such amendment would increase the maximum number of shares of Common Stock available under...

  • Page 98
    .... The award agreement relating to a bonus stock unit award will specify (i) whether such award may be settled in shares of Common Stock, cash or the combination thereof and (ii) whether the holder will be entitled to receive, NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | 80

  • Page 99
    ... costs, extraordinary or noncash items, unusual, nonrecurring or one-time events affecting the Company or its financial statements or changes in law or accounting principles. NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT 81 | The Western Union Company - Proxy Statement

  • Page 100
    ...States tax laws before taking any actions with respect to any awards. Section 162(m) of the Code Section 162(m) of the Code generally limits to $1 million the amount that a publicly held corporation is allowed each year to deduct for the compensation paid to the corporation's chief executive officer...

  • Page 101
    ... of deferred stock units, the amount of any cash paid by the Company. The amount of ordinary income recognized is deductible by the Company as compensation expense, except to the extent the deduction limits of Section 162(m) of the Code apply. NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY...

  • Page 102
    ... in person or represented by proxy at the meeting and entitled to vote on the subject matter is required to approve this Proposal 3. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR PROPOSAL 3. NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT The Western Union Company - Proxy...

  • Page 103
    ... filed with the SEC; and other accounting and financial reporting consultation and research work billed as audit fees or necessary to comply with the standards of the Public Company Accounting Oversight Board (United States). Audit-Related Fees. Ernst & Young LLP's fees for audit-related services...

  • Page 104
    ... or fully accelerates upon CEO termination according to GMI Ratings, an independent investment research firm. Western Union had not disclosed specific, quantifiable performance objectives for our CEO. Western Union gives long-term incentive pay to executives without requiring the company to perform...

  • Page 105
    ... or group of stockholders holding 20% or more of our outstanding shares may call a special meeting. • Our Amended and Restated Certificate of Incorporation and By-Laws have no supermajority provisions. The Board of Directors has a demonstrated history of commitment to high standards of corporate...

  • Page 106
    ...being taken by the Board, and therefore, its approval would not effectuate the actions requested by the proposal. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE AGAINST PROPOSAL 5. NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT The Western Union Company - Proxy Statement | 88

  • Page 107
    ...as well as the amount paid to each; and b. The title(s) of the person(s) in the Company responsible for decision-making. The report shall be presented to the board of directors or relevant board committee and posted on the Company's website. Stockholder Supporting Statement As long-term shareholders...

  • Page 108
    .... 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. NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT The Western Union Company - Proxy...

  • Page 109
    ... 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. NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT 91 | The Western Union Company - Proxy Statement

  • Page 110
    ...Western Union to incur undue costs and administrative burdens without commensurate benefit to our stockholders. Required Vote; Recommendation Only The affirmative vote of the holders of a majority of shares of the Company's Common Stock present in person or represented by proxy at the Annual Meeting...

  • Page 111
    ... by the Board of Directors. SUPPORTING STATEMENT As reported by the Interfaith Center on Corporate Responsibility, the forceful exploitation of persons-for labor or sexual purposes-is the third largest illegal "business" globally. Due to our Company's popularity as a reputable financial conduit, we...

  • Page 112
    ... of the outstanding Common Stock entitled to vote on the subject matter is required to approve this Proposal 7. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE AGAINST PROPOSAL 7. The Western Union Company - Proxy Statement NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | 94

  • Page 113
    ...on December 31, 2014 under The Western Union Company 2006 Long-Term Incentive Plan and The Western Union Company 2006 Non-Employee Director Equity Compensation Plan. Restricted stock unit awards, deferred stock unit awards and bonus stock units may be settled only for shares of Common Stock on a one...

  • Page 114
    ... the 2014 Summary Compensation Table contained in this Proxy Statement, and all directors and executive officers as a group. Except as otherwise noted, (i) the information is as of March 19, 2015, (ii) each person has sole voting and investment power of the shares, and (iii) the business address of...

  • Page 115
    ... Beneficially Owned by Directors, Executive Officers and Our Largest Stockholders (1) PROXY STATEMENT The number of shares held and percentage of outstanding shares were obtained from the holder's Amendment No. 2 to Schedule 13G filing with the Securities and Exchange Commission dated February 13...

  • Page 116
    ... 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 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT Section 16(a) Beneficial Ownership Reporting Compliance PROXY STATEMENT...

  • Page 117
    ..., that for purposes of clause (B), if any Person (other than the Company or any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company) shall become the beneficial owner of A-1 | The Western Union Company - Proxy Statement

  • Page 118
    ... United States Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder. "Committee" shall mean the committee designated by the Board or a subcommittee thereof, consisting of two or more members of the Board, each of whom shall be (i) a "non-employee director...

  • Page 119
    ... term is defined in this Section 1.2. "Exchange Act" shall mean the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. "Fair Market Value" shall mean the closing price of a share of Common Stock as reported on the New York Stock Exchange...

  • Page 120
    ... return; revenues; cash flow(s); cost reduction goals; net income; operating income; profit margin; expense management; economic profit; economic value added; customer satisfaction; productivity; employee retention; succession management; management of the cost of PROXY STATEMENT insurance...

  • Page 121
    ... 2.3(e) following termination of employment with or service to the Company during which a Stock Option or SAR may be exercised. "Prior Plan" shall mean The Western Union Company 2006 Long-Term Incentive Plan and each other plan previously maintained by the Company under which equity awards remain...

  • Page 122
    ...of its power and authority hereunder to the Board or, subject to applicable law, to another committee, a member of the Board, the President and Chief Executive Officer or such other NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT The Western Union Company - Proxy Statement | A-6

  • Page 123
    ... to Section 16 of the Exchange Act or decisions concerning the timing, pricing or amount of an award to such an officer, Non-Employee Director or other person and (z) any decision regarding the impact of a Change in Control on awards issued under the Plan. No member of the Board or Committee, and...

  • Page 124
    ... or withheld by the Company to pay the purchase price or the withholding taxes related to an outstanding award or (z) shares repurchased by the Company on the open market with the proceeds of an option exercise. (c) Source of Shares. Shares of Common Stock shall be made available from authorized but...

  • Page 125
    ..., grant SARs to such eligible persons as may be selected by the Committee. The Agreement relating to a SAR shall specify whether the SAR is a Tandem SAR or a Free-Standing SAR. NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT A-9 | The Western Union Company - Proxy Statement

  • Page 126
    ... representing shares of Common Stock shall be delivered until any withholding taxes thereon, as described in Section 5.5, have been paid (or arrangement made for such payment to the Company's satisfaction). NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT The Western Union Company...

  • Page 127
    ... (30th) day following such holder's termination of employment or service. If the New York Stock Exchange is closed on such date, then such Stock Option or SAR shall be forfeited and shall be NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT A-11 | The Western Union Company - Proxy...

  • Page 128
    ...granted, (ii) cancel a Stock Option or SAR when the purchase price or base price per share of Common Stock subject to such Stock Option or SAR exceeds the Fair Market Value of one share of Common Stock in exchange for cash or another award (other than in connection with a Change in Control), or (iii...

  • Page 129
    ..., may grant dividend equivalents on Restricted Stock Unit Awards which are settled in shares of Common Stock. No shares of Common Stock and no certificates or other indicia of NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT A-13 | The Western Union Company - Proxy Statement

  • Page 130
    ... set forth in the Agreement relating to a Stock Award, if the employment with or service to the Company of the holder of such award terminates by reason of Disability or death, the NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT The Western Union Company - Proxy Statement | A-14

  • Page 131
    ... the holder's termination of employment or service and the denominator of which is the number of days between the grant date and the date the Restriction Period applicable to the Restricted Stock Unit Award would have lapsed in full. (ii) In the case of Restricted Stock Unit Awards which are subject...

  • Page 132
    ... law, rule or regulation, including Section 162(m) and Section 422 of the Code and the rules of the New York Stock Exchange; provided, however, that no amendment of the Plan shall be made without stockholder approval if such amendment would (i) increase the maximum number of shares of Common Stock...

  • Page 133
    ... withheld or paid in connection with such award. An Agreement may provide that (i) the Company shall withhold whole shares of Common Stock which would otherwise be delivered to a holder having an aggregate Fair Market Value determined as of the date the obligation to withhold or pay taxes arises in...

  • Page 134
    ... Securities Act of 1933, as amended, and the rules and regulations thereunder. 5.7. Adjustment. In the event of any equity restructuring (within the meaning of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation-Stock Compensation) that causes the per share...

  • Page 135
    ... equity security of the Company which is subject to an award hereunder unless and until such person becomes a stockholder of record with respect to such shares of Common Stock or equity security. 5.12. Designation of Beneficiary. If permitted by the Committee, the holder of an award may file with...

  • Page 136
    ... or their employees, officers, directors, service providers or agents have any liability to any person for any taxes, penalties or interest due on amounts paid or payable under the Plan, including any taxes, penalties or interest imposed under Section 409A of the Code. Any payments to award holders...

  • Page 137
    MOVING MONEY FOR BETTER N OT I C E O F 2015 ANNUAL ME ET I N G O F STO C K HO L D E RS, PROXY STATE ME N T & 2 014 A N N UA L R E P O RT 2014 FORM 10-K

  • Page 138
    (This page has been left blank intentionally.)

  • Page 139
    ...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 Value Name...

  • Page 140
    ... 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 141
    ... and gain market acceptance of new and enhanced services in response to changing industry and consumer needs or trends; 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...

  • Page 142
    ... standards, including changes in interpretations in the United States and globally, affecting us, our agents or their subagents, or the banks with which we or our agents maintain bank accounts needed to provide our services, including related to antimoney laundering regulations, anti-fraud measures...

  • Page 143
    Other Events adverse tax consequences from our spin-off from First Data Corporation; catastrophic events; and management's ability to identify and manage these and other risks. 2014 FORM 10-K 5

  • Page 144
    ... 1. BUSINESS Overview The Western Union Company (the "Company," "Western Union," "we," "our" or "us") is a leader in global money movement and payment services, providing people and businesses with fast, reliable and convenient ways to send money and make payments around the world. The Company was...

  • Page 145
    ...to receive a money transfer. While the vast majority of transfers are paid in cash at agent locations, in some places we offer payout directly to the receiver's bank account, to a stored-value card, through the issuance of a money order, or at a small number of locations, through a check. Operations...

  • Page 146
    ... the phone using a debit or credit card or through our account based money transfer service, as described below. Additionally, in a few select markets, we offer consumers a lower-priced next day delivery service option for money transfers that do not need to be received within minutes. Online money...

  • Page 147
    ... both regulators and certain of our current and prospective agents, especially in certain inbound countries. Further, we are seeing increased competition from, and increased market acceptance of, electronic, mobile, and Internet-based money transfer services as well as digital currencies. 2014 FORM...

  • Page 148
    ... utilities, 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...

  • Page 149
    ... money to employees or individuals with whom they have accounts or other business relationships. Consumers also use our Western Union Convenience Pay® ("Convenience Pay") service to send payments by cash or check from a smaller number of Convenience Pay agent locations primarily to utilities and...

  • Page 150
    ... own or third-party services to their own customers and third-party providers of all sizes offering services directly to consumers. Competitors for cash payments include businesses that allow consumers to pay a bill at one of their locations, or at the location of a partner business, as well as mail...

  • Page 151
    ... registered and used in many countries around the world. We offer money transfer services under the Western Union, Orlandi ValutaSM and Vigo® brands. We also provide various payment and other services such as Western Union Payments, Quick Collect, Convenience Pay, Quick Pay, Quick Cash, Speedpay...

  • Page 152
    ...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 153
    ... 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 154
    ...may offer money transfer services, agent registration requirements, limitations on the amount of principal that can be sent into or out of a country, limitations on the number of money transfers that may be sent or received by a consumer and controls on the rates of exchange between currencies. They...

  • Page 155
    ... one agent or in aggregate; impose taxes or fees on money transfer transactions; and restrict or limit our ability to process transactions using centralized databases, for example, by requiring that transactions be processed using a database maintained in a particular country. 2014 FORM 10...

  • Page 156
    ... sending funds internationally from the United States enhanced, written, pre-transaction disclosures, including the disclosure of fees, foreign exchange rates and taxes, an obligation to resolve various errors, including certain errors that may be outside our control, and an obligation to cancel...

  • Page 157
    ..., financial condition and results of operations." In connection with regulatory requirements to assist in the prevention of money laundering and terrorist financing and pursuant to legal obligations and authorizations, Western Union makes information available to certain United States federal...

  • Page 158
    ... outside the United States. Available Information The Western Union Company is a Delaware corporation and its principal executive offices are located at 12500 East Belford Avenue, Englewood, CO, 80112, telephone (866) 405-5012. The Company's Annual Report on Form 10-K, quarterly reports on Form 10...

  • Page 159
    ... Vice President 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...

  • Page 160
    ... Americas and Global Cards. Before joining Western Union, Mr. Williams worked for Fullerton Financial Holdings (a wholly-owned subsidiary of Temasek Holdings) as its Senior Vice President of Human Resources for Central and Eastern Europe, Middle East and Africa, based in Dubai, United Arab Emirates...

  • Page 161
    ... 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 making payments to them through us...

  • Page 162
    ... or stored-value cards, informal remittance systems, phone payment systems (including mobile phone networks), postal organizations, retailers, check cashers, mail and courier services, currency exchanges, consumer money transfer companies, and digital currencies. These services are differentiated by...

  • Page 163
    ... changes in laws or regulations or regulator or judicial interpretation thereof that have the effect of making it more difficult or less desirable to transfer money using consumer money transfer and payment service providers, including additional customer due diligence, identification, reporting...

  • Page 164
    ...be successful. We actively seek to respond in a timely manner to changes in customer (both consumer and business) needs and preferences, technology advances and new and enhanced products and services such as technology-based money transfer and Business Solutions payments services, including Internet...

  • Page 165
    ... at relatively low foreign tax rates compared to our combined federal and state tax rate in the United States. We utilize a variety of planning and financial strategies to help ensure that our worldwide cash is available where needed, including decisions related to the amounts, timing, and manner by...

  • Page 166
    ... of our information security policies or safeguards could adversely affect our ability to operate 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...

  • Page 167
    ... example realizing the anticipated financial benefits from these acquisitions and where necessary, improving internal controls of these acquired businesses; managing geographically separated organizations, systems and facilities; managing multi-jurisdictional operating, tax and financing structures...

  • Page 168
    ... for the derivatives or may bear financial risk for those receivables where we have offered trade credit. We offer consumers in select countries the ability to transfer money utilizing their bank account or credit or debit card via the Internet and phone. These transactions have experienced and...

  • Page 169
    ... subagents, or the banks with which we or our agents maintain bank accounts needed to provide our services could require changes in our business model and increase our costs of operations, which could adversely affect our operations, results of operations, financial condition, and liquidity" below...

  • Page 170
    ... the name would harm our business. Similar to the Western Union trademark, the Vigo, Orlandi Valuta, Speedpay, Pago Fácil, Western Union Payments, Quick Collect, Quick Pay, Convenience Pay, Western Union Business Solutions and other trademarks and service marks are also important to our Company and...

  • Page 171
    ... of Financial Condition and Results of Operations. The IRS completed its examination of the United States federal consolidated income tax returns of First Data, which include our 2005 and pre-Spin-off 2006 taxable periods and issued its report on October 31, 2012 ("FDC 30-Day Letter"). Furthermore...

  • Page 172
    ... of our cash flow 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...

  • Page 173
    ...and consumer protection, currency controls, money transfer and payment instrument licensing, 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...

  • Page 174
    ..., and anti-money laundering regulations, and agent oversight and monitoring requirements, which have increased and will continue to increase our costs. These laws could also increase competition in some or all of our areas of service. The remittance industry, including Western Union, has...

  • Page 175
    .... 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 States and Mexico border, including in...

  • Page 176
    ...our services, in the relevant jurisdiction. Changes mandated by laws which make Western Union responsible for acts of its agents while they are providing the Western Union money transfer service increase our risk of regulatory liability and our costs to monitor our agents' performance. 2014 FORM 10...

  • Page 177
    ... competitors, many of our Western Union branded agents have agreed to offer only our money transfer services. While we expect to continue signing certain agents under exclusive arrangements and believe that these agreements are valid and enforceable, changes in laws regulating competition or in the...

  • Page 178
    ...our business practices, limiting our ability to pursue business opportunities, requiring us to invest valuable management time and resources in compliance efforts, imposing additional costs on us, delaying our ability to respond to marketplace changes, requiring us to alter our products and services...

  • Page 179
    ... by the CFPB, which in September 2014 finalized a rule defining "larger participants of a market for other consumer financial products or services" as including companies, such as Western Union, that make at least one million aggregate annual international money transfers. The CFPB has the authority...

  • Page 180
    ... of money laundering and terrorist financing and pursuant to legal obligations and authorizations, Western Union makes information available to certain United States federal, state, and foreign government agencies when required by law. In recent years, Western Union has experienced increasing data...

  • Page 181
    ... capital to meet the changing requirements of our various regulators worldwide, which could adversely affect our business, financial condition and results of operations. Our regulators expect us to possess sufficient financial soundness and strength to adequately support our regulated subsidiaries...

  • Page 182
    ...from Western Union. Even if the Spin-off otherwise qualified as a tax-free distribution under section 355 of the Internal Revenue Code, the Spinoff may result in significant United States federal income tax liabilities to First Data if 50% or more of First Data's stock or our stock (in each case, by...

  • Page 183
    ...-to-Business, and Business Solutions segments and are all currently being utilized. In certain locations, our offices include customer service centers, where our employees answer operational questions from agents and customers. Our office in Dublin, Ireland serves as our international headquarters...

  • Page 184
    ... to US Shen Zhou, materials relating to certain other former and current agents and other materials relating to the Company's anti-money laundering ("AML") compliance policies and procedures. The government has interviewed several current and former Western Union employees and has served grand jury...

  • Page 185
    ...Company's AML, Bank Secrecy Act ("BSA"), Suspicious Activity Report ("SAR") and Currency Transaction Report procedures, transaction monitoring protocols, BSA and AML training programs and publications, AML compliance investigation reports, compliance-related agent termination files, SARs, BSA audits...

  • Page 186
    ... payments to certain Equity Accelerator consumers, civil money penalties, or regulatory consequences that could have a material adverse effect on the Company's business, financial condition and results of operations. In December 2013, the United States Securities and Exchange Commission (the "SEC...

  • Page 187
    ... to increase market share, make limited price adjustments and withstand competitive pressures; (3) the effect of compliance measures under the Southwest Border Agreement on agent retention and business in Mexico; and (4) the Company's progress in implementing an anti-money laundering program for...

  • Page 188
    ... Company, failed to take action in response to alleged Western Union management efforts to undermine the Monitor, reappointed the same directors to the Audit Committee and Corporate Governance and Public Policy Committees constituting a majority of those committees between 2006 and 2014, appointed...

  • Page 189
    ... and that the former executive officer sold Company stock while in possession of material, adverse, non-public information that artificially inflated the price of Western Union stock. On December 17, 2014, one of the individual defendants removed the case to the United States District Court for...

  • Page 190
    ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 2014 FORM 10-K 52

  • Page 191
    PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock trades on the New York Stock Exchange under the symbol "WU." There were 4,073 stockholders of record as of February 13, 2015. This figure does not include an...

  • Page 192
    ...our operating subsidiaries are subject to financial services regulations and their ability to pay dividends and distribute cash may be restricted. On February 10, 2015, the Board of Directors declared a quarterly cash dividend of $0.155 per common share payable on March 31, 2015. 2014 FORM 10-K 54

  • Page 193
    ... 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) 2014 2013 2012 2011 2010 Statements of Income Data...

  • Page 194
    ... we previously did not hold. Additionally, in 2011, we recognized a $20.8 million net gain 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...

  • Page 195
    ... contracts for customers to facilitate future payments. • • All businesses that have not been classified in the above segments are reported as "Other" and include our money order and other businesses and services, in addition to costs for the review and closing of acquisitions. 2014 FORM...

  • Page 196
    ... 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. Business Solutions represented 7% of our consolidated revenue for...

  • Page 197
    ...ended December 31, 2014, 2013 and 2012. Year Ended December 31, 2014 2013 2012 % Change 2014 2013 vs. 2013 vs. 2012 (in millions, except per share amounts) Revenues: Transaction fees...Foreign exchange revenues ...Other revenues...Total revenues...Expenses: Cost of services ...Selling, general and...

  • Page 198
    ... 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 set by us to the consumer or business and the rate at which we or our agents are able to acquire the currency...

  • Page 199
    ... 31, 2014 compared to the prior year due to variable costs that generally fluctuate with revenues and transactions, such as agent commissions and bank-related fees. Additionally, cost of services increased due to higher bank-related fees in our Consumer-to-Business and Business Solutions segments...

  • Page 200
    ... due to increased compliance program costs, including costs related to our amended settlement agreement with the State of Arizona, investments in our strategic initiatives, lower compensation expenses in 2012, and costs associated with our productivity and cost savings initiatives, partially offset...

  • Page 201
    ... number of shares outstanding was due to stock repurchases exceeding stock issuances related to the Company's stock compensation programs. Segment Discussion We manage our business around the consumers and businesses we serve and the types of services we offer. Each of our three segments addresses...

  • Page 202
    ... to another, around the world. The segment includes five geographic regions whose functions are limited to generating, managing and maintaining agent relationships and localized marketing activities and also includes our online money transfer service conducted through Western Union branded websites...

  • Page 203
    ... rate between the United States dollar and the Argentine peso and other South American currencies. 2014 FORM 10-K We provide domestic money transfer services (transactions between and within the United States and Canada), which are included in North America and westernunion.com in the tables...

  • Page 204
    ... offset by price reductions and geographic and product mix. For the year ended December 31, 2014, fluctuations in the exchange rate between the United States dollar and other currencies, net of the impact of foreign currency hedges, negatively impacted revenue by 2%. Our Europe and CIS region...

  • Page 205
    ... to price reductions and compliance related actions resulting from our settlement agreement 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...

  • Page 206
    ... of the United States dollar against the Argentine peso, which negatively impacted our Consumer-toBusiness revenue growth by 12%, and declines in our United States cash-based bill payments. These decreases were partially offset by growth in our United States electronic bill payments. 2014 FORM 10...

  • Page 207
    ... 2014 FORM 10-K Business Solutions revenue grew 3% for the year ended December 31, 2014 compared to the prior year due to increased customer activity, including the increased use of hedging products. Fluctuations in the exchange rate between the United States dollar and other currencies negatively...

  • Page 208
    ... to increases in our retail walk-in foreign exchange services resulting from our acquisition of Fitta, and increased investment income in our money order business, partially offset by declines in our prepaid services. 2013 compared to 2012 Other revenue decreased for the year ended December 31, 2013...

  • Page 209
    ... income due to increased operating income in our prepaid services and increased investment income in our money order business. 2013 compared to 2012 Operating loss for the year ended December 31, 2013 was materially consistent with the corresponding period in the prior year. 2014 FORM 10-K 71

  • Page 210
    ... our worldwide cash where needed, we utilize a variety of planning and financial strategies, including decisions related to the amounts, timing, and manner by which cash is repatriated or otherwise made available from our international subsidiaries. These decisions can influence our overall tax rate...

  • Page 211
    ... in order to comply with state licensing requirements in the United States and are required to have credit ratings of "A-" or better from a major credit rating agency. Investment securities are exposed to market risk due to changes in interest rates and credit risk. We regularly monitor credit risk...

  • Page 212
    .... (b) 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...

  • Page 213
    ... Revolving Credit Facility is fixed for the term 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 110 basis points. A facility fee of 15 basis points is also payable quarterly on...

  • Page 214
    ... on the 2016 Notes is payable semi-annually on April 1 and October 1 each year based on the fixed per annum rate of 5.930%. We may redeem the 2016 Notes at any time prior to maturity at the greater of par or a price based on the applicable treasury rate plus 20 basis points. 2014 FORM 10-K 76

  • Page 215
    ... operating activities, access to the commercial paper markets and 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 $179...

  • Page 216
    ... declared dividend, which was paid in October 2012. On February 10, 2015, the Board of Directors declared a quarterly cash dividend of $0.155 per common share payable on March 31, 2015. Debt Service Requirements Our 2015 and future debt service requirements will include payments on any existing and...

  • Page 217
    ... royalty rights and private equity funds). Hedge fund strategy types include, but are not limited to: equity long/short, commodities/currencies, relative value, event driven and multi-strategy. The Plan holds interest rate derivative contracts directly, including interest rate futures that are based...

  • Page 218
    ...outside our control. (e) Represents the liability position of our foreign currency and interest rate derivative contracts as of December 31, 2014, 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 219
    ... in most circumstances. The bank guarantees related to the uncertain tax position were extinguished in January 2015 after resolution of the related matter. Critical Accounting Policies and Estimates Management's discussion and analysis of results of operations and financial condition is based on our...

  • Page 220
    ...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 221
    ... 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 222
    ...exchange impact from revenues generated in currencies other than the United States dollar; (d) increased regulatory compliance requirements; (e) our ability to enter relationships with partners that can accelerate our time to market; (f) failure of long-term import growth rates returning to historic...

  • Page 223
    ... market rates and prices, including changes in foreign currency exchange rates and interest rates and credit risk related to our agents and customers. A risk management program is in place to manage these risks. Foreign Currency Exchange Rates We provide Consumer-to-Consumer money transfer services...

  • Page 224
    ... assets consist of highly-rated state and municipal debt securities which are fixed rate term notes. These investments may include investments made from cash received from our money order services, money transfer business, and other related payment services awaiting redemption classified within...

  • Page 225
    ... concentrations, trading levels, credit spreads and credit ratings, and we attempt to diversify our investments among global financial institutions. 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...

  • Page 226
    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 227
    ...is effective. Western Union's internal control over financial reporting as of December 31, 2014 has been audited by Ernst & Young LLP, Western Union's independent registered public accounting firm, as stated in their attestation report included in this Annual Report on Form 10-K. 2014 FORM 10-K 89

  • Page 228
    ... of Independent Registered Public Accounting Firm The Board of Directors and Stockholders of The Western Union Company We have audited The Western Union Company's internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control-Integrated Framework...

  • Page 229
    ...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 reporting as of December 31, 2014, based on criteria established in Internal Control...

  • Page 230
    THE WESTERN UNION COMPANY CONSOLIDATED STATEMENTS OF INCOME (in millions, except per share amounts) Year Ended December 31, 2014 2013 2012 Revenues: Transaction fees ...$ Foreign exchange revenues ...Other revenues ...Total revenues ...Expenses: Cost of services ...Selling, general and ...

  • Page 231
    THE WESTERN UNION COMPANY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions) Year Ended December 31, 2014 2013 2012 Net income ...$ Other comprehensive income/(loss), net of tax (Note 13): Unrealized gains/(losses) on investment securities...Unrealized gains/(losses) on hedging ...

  • Page 232
    THE WESTERN UNION COMPANY CONSOLIDATED BALANCE SHEETS (in millions, except per share amounts) December 31, 2014 2013 Assets Cash and cash equivalents ...$ Settlement assets ...Property and equipment, net of accumulated depreciation of $478.5 and $428.6, respectively...Goodwill ...Other intangible ...

  • Page 233
    ... from sale of non-settlement related investments ...Acquisition of businesses, net (Note 4) ...Net cash used in investing activities ...Cash flows from financing activities Proceeds from exercise of options ...Cash dividends paid ...Common stock repurchased (Note 13)...Net repayments of commercial...

  • Page 234
    ... shares ...Shares issued under stock-based compensation plans ...Tax adjustments from employee stock option plans ...Unrealized losses on investment securities, net of tax ...Unrealized losses on hedging activities, net of tax ...Foreign currency translation adjustment, net of tax ...Defined benefit...

  • Page 235
    ... movement and 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...

  • Page 236
    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 237
    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, 2014 2013 2012 Basic weighted-average shares outstanding ...Common stock ...

  • Page 238
    ... 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 239
    ...currency exchange contracts is largely mitigated, as in most cases the Company requires the receipt of funds from customers before releasing the associated cross-currency payment. Settlement obligations consist of money transfer, money order and payment service payables and payables to agents. Money...

  • Page 240
    ... with the Company's acquisitions. The Company capitalizes initial payments for new and renewed agent contracts to the extent recoverable through future operations or penalties in the case of early termination. The Company's accounting policy is to limit the amount of capitalized costs for a given...

  • Page 241
    ... 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 of...

  • Page 242
    ... was incurred. Derivatives The Company uses derivatives to (a) minimize its 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. The Company recognizes all derivatives in...

  • Page 243
    ... 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 244
    ... and cost-savings initiatives costs relate to severance and related expenses, and for the year ended December 31, 2013, these costs also included costs related to termination benefits received by certain of the Company's former executives. During the years ended December 31, 2014, 2013 and 2012, the...

  • Page 245
    THE WESTERN UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 4. Acquisitions During the first quarter of 2014, the Company acquired the Brazilian retail, walk-in foreign exchange operations of Fitta DTVM S.A. and Fitta Turismo Ltda. for total consideration of $18.5 million. Of ...

  • Page 246
    ... WESTERN UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 5. Commitments and Contingencies Letters of Credit and Bank Guarantees The Company had approximately $210 million in outstanding letters of credit and bank guarantees as of December 31, 2014. The letters of credit and bank...

  • Page 247
    ... by the Monitor. The Amendment also requires WUFSI to make a one-time payment of $250,000, which was paid in March 2014, and thereafter $150,000 per month for five years to fund the activities and expenses of a money transfer transaction data analysis center formed by WUFSI and a Financial Crimes...

  • Page 248
    THE WESTERN UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) United States Department of Justice Investigations 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...

  • Page 249
    ... to increase market share, make limited price adjustments and withstand competitive pressures; (3) the effect of compliance measures under the Southwest Border Agreement on agent retention and business in Mexico; and (4) the Company's progress in implementing an anti-money laundering program for...

  • Page 250
    ... 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 251
    ... First Data Corporation ("First Data") Board of Directors announced its intention to pursue the distribution of all of its money transfer and consumer payments business and its interest in a Western Union money transfer agent, as well as its related assets, including real estate, through a tax-free...

  • Page 252
    .... 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 credit risk and attempts to mitigate...

  • Page 253
    THE 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, 2014 Amortized Cost Fair Value Settlement assets: ...

  • Page 254
    ... the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. For additional information on how the Company...

  • Page 255
    THE WESTERN UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) No non-recurring fair value adjustments were recorded during the years ended December 31, 2014 and 2013, except those associated with acquisitions. The valuation of assets acquired, as disclosed in Note 4, was derived ...

  • Page 256
    THE WESTERN UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 10. Income Taxes The components of pre-tax income, generally based on the jurisdiction of the legal entity, were as follows (in millions): Year Ended December 31, 2013 2012 2014 Domestic ...$ Foreign...$ 34.7 933.5 ...

  • Page 257
    THE WESTERN UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The decrease in the Company's effective tax rate for the year ended December 31, 2014 compared to 2013 is primarily due to the combined effect of various discrete items, including those related to foreign currency ...

  • Page 258
    THE WESTERN UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The valuation allowances are primarily the result of uncertainties regarding the Company's ability to recognize tax benefits associated with certain foreign net operating losses, certain U.S. foreign tax credit ...

  • Page 259
    ... been paid as of December 31, 2014. A substantial majority of these payments were made in the year ended December 31, 2012. The Company expects to pay the remaining amount in 2015 and beyond. The IRS completed its examination of the United States federal consolidated income tax returns of First Data...

  • Page 260
    ...as a result of the Spin-off being taxable to First Data, it likely would have a material adverse 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. 2014 FORM 10-K 122

  • Page 261
    ... CONSOLIDATED FINANCIAL STATEMENTS (Continued) 11. Employee Benefit Plans Defined Contribution Plans The Western Union Company Incentive Savings Plan (the "401(k)") covers eligible employees on the United States payroll of the Company. Employees who make voluntary contributions to this plan receive...

  • Page 262
    ... used in the measurement of the Company's net cost were as follows: 2014 3.27% 3.91% 2013 2012 Discount rate ...Expected long-term return on plan assets ... 3.91% 7.00% 3.03% 7.00% 3.72% 7.00% The Company measures the Plan's obligations and annual expense using assumptions that reflect best...

  • Page 263
    ...WESTERN UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The Company employs a building block approach in determining 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...

  • Page 264
    ...). For information on how the Company measures fair value, refer to Note 2. December 31, 2014 Asset Class Fair Value Measurement Using Level 1 Level 2 Level 3 Total Assets at Fair Value Equity investments: Domestic ...$ International (a) ...Debt securities: Corporate debt (b) ...U.S. treasury...

  • Page 265
    ... securities. (c) Hedge funds generally hold liquid and readily priceable securities, such as public equities, exchange-traded derivatives, and corporate bonds. Hedge funds themselves do not have readily available market quotations, and therefore are valued using the Net Asset Value ("NAV") per share...

  • Page 266
    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 267
    ...loss affect the line items as indicated below within the Consolidated Statements of Income. Year Ended December 31, 2014 2013 2012 Unrealized gains on investment securities, beginning of period ...$ Unrealized gains/(losses) ...Tax (expense)/benefit ...Reclassification of gains into "Other revenues...

  • Page 268
    ... Company uses derivatives to (a) minimize its 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. The Company executes derivatives with established financial institutions...

  • Page 269
    ... 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, 2014, the Company's longer-term foreign currency forward contracts had maturities of a maximum of 24 months...

  • Page 270
    ...in its Business Solutions operations as of December 31, 2014 were approximately $5.5 billion. The significant majority of customer contracts are written in major currencies such as the Australian dollar, British pound, Canadian dollar, and euro. Interest Rate Hedging - Corporate The Company utilizes...

  • Page 271
    ... WESTERN UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The following table summarizes the net fair value of derivatives held as of December 31, 2014 and their expected maturities (in millions): Total Foreign currency cash flow hedges - Consumer-to-Consumer...$ Foreign currency...

  • Page 272
    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, 2014 and December 31, 2013 (in millions): Offsetting of Derivative Assets Gross Amounts of Recognized ...

  • Page 273
    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 274
    ...business discussed above. (e) The Company uses foreign currency forward contracts to offset foreign exchange rate fluctuations on settlement assets and obligations as well as certain foreign currency denominated positions. Foreign exchange gains/(losses) on settlement assets and obligations and cash...

  • Page 275
    ... (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 exposure to interest rates. The changes in...

  • Page 276
    ... Revolving Credit Facility is fixed for the term 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 110 basis points. A facility fee of 15 basis points is also payable quarterly on...

  • Page 277
    THE WESTERN UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) On December 10, 2012, the Company issued $250.0 million and $500.0 million of aggregate principal amounts of unsecured notes due December 10, 2015 ("2015 Fixed Rate Notes") and December 10, 2017 ("2017 Notes"), ...

  • Page 278
    THE WESTERN UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) On February 26, 2009, the Company issued $500.0 million of aggregate principal amount of unsecured notes due February 26, 2014 ("2014 Notes"). Interest with respect to the 2014 Notes was payable semi-annually on ...

  • Page 279
    ... 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 awards and other equity-based awards to employees and...

  • Page 280
    THE WESTERN UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) In 2012, the Company started granting bonus stock units out of the 2006 LTIP to the non-employee directors of the Company. Since bonus stock units vest immediately, compensation expense is recognized on the date of ...

  • Page 281
    ... and historical volatility. The Company's implied volatility was calculated using the market price of traded options on Western Union's common stock and the historical volatility of Western Union stock data. Expected term - For 2014, 2013 and 2012, Western Union's expected term for all employees was...

  • Page 282
    ... future, as more historical data is available to calculate the volatility of Western Union stock and the actual terms Western Union employees hold options, expected volatility and expected term may change which could change the grant-date fair value of future stock option awards and, ultimately, the...

  • Page 283
    ..., around the world. The segment includes 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...

  • Page 284
    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, 2014, 2013 and 2012, respectively (in millions): Year Ended December 31, 2014 2013 2012 Revenues: Consumer-to-...

  • Page 285
    THE WESTERN UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Year Ended December 31, 2014 2013 2012 Assets: Consumer-to-Consumer...$ 5,049.7 Consumer-to-Business...1,060.2 Business Solutions...2,430.7 Other ...1,349.8 Total assets ...$ 9,890.4 Depreciation and amortization: ...

  • Page 286
    ...WESTERN UNION COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 18. Quarterly Financial Information (Unaudited) Summarized quarterly results for the years ended December 31, 2014 and 2013 were as follows (in millions, except per share data): Year Ended December 31, 2014 2014 by Quarter...

  • Page 287
    ... following lists the condensed financial information for the parent company as of December 31, 2014 and 2013 and statements of income and comprehensive income and cash flows for each of the three years in the period ended December 31, 2014. THE WESTERN UNION COMPANY CONDENSED BALANCE SHEETS (PARENT...

  • Page 288
    THE WESTERN UNION COMPANY CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (PARENT COMPANY ONLY) (in millions) For the Years Ended December 31, 2014 2013 2012 Revenues ...$ Expenses ...Operating income ...Interest income ...Interest expense...Loss before equity in earnings of affiliates and ...

  • Page 289
    THE WESTERN UNION COMPANY CONDENSED STATEMENTS OF CASH FLOWS (PARENT COMPANY ONLY) (in millions) For the Years Ended December 31, 2014 2013 2012 Cash flows from operating activities Net cash provided by operating activities ...$ Cash flows from investing activities Purchases of property and ...

  • Page 290
    ... meet minimum capital requirements in some countries in order to maintain operating licenses. 3. Related Party Transactions On October 1, 2012, the Parent issued a promissory note payable to its 100% owned subsidiary First Financial Management Corporation in the amount of $268.2 million in exchange...

  • Page 291
    ... report on Western Union's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934), and the related Report of Independent Registered Public Accounting Firm, are set forth under Item 8 of this Annual Report on Form...

  • Page 292
    ... Reporting Compliance," and "Corporate Governance-Committees of the Board of Directors" of our definitive proxy statement for the 2015 annual meeting of stockholders. Code of Ethics The Company's Directors' Code of Conduct, Code of Ethics for Senior Financial Officers, Procedure for Accounting...

  • Page 293
    ... 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. 2014...

  • Page 294
    ... by the undersigned, thereunto duly authorized. The Western Union Company (Registrant) February 20, 2015 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...

  • Page 295
    ...11 to the Company's Registration Statement on Form S-4 filed on December 22, 2006 and incorporated herein 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...

  • Page 296
    ... The Western Union Company (filed as Exhibit 10.2 to the Company's Current Report on Form 8-K filed on October 3, 2006 and incorporated herein by reference thereto). Transition Services Agreement, dated as of September 29, 2006, between First Data Corporation and The Western Union Company (filed as...

  • Page 297
    ... Severance/Change in Control Policy (Executive Committee Level), as Amended and Restated Effective February 20, 2014 (filed as Exhibit 10.16 to the Company's Quarterly Report on Form 10-Q filed on May 1, 2014 and incorporated herein by reference thereto).* The Western Union Company 2006 Long-Term...

  • Page 298
    ...2006 Long-Term Incentive Plan (filed as Exhibit 10.29 to the Company's Annual Report on Form 10-K filed on February 24, 2014 and incorporated herein by reference thereto).* Form of Nonqualified Stock Option Award Agreement for Section 16 Officers (U.S.) Under The Western Union Company 2006 Long-Term...

  • Page 299
    ... by reference thereto).* 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 and incorporated herein...

  • Page 300
    ... thereto).* Form of Supplemental Restricted Stock Unit Award Agreement for Section 16 Officers (U.S.) Under The Western Union Company 2006 Long-Term Incentive Plan For Awards Granted in 2014 and Thereafter (filed as Exhibit 10.9 to the Company's Quarterly Report on Form 10-Q filed on May 1, 2014 and...

  • Page 301
    ... 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. 2014 FORM 10-K 163

  • Page 302
    (This page has been left blank intentionally.)

  • Page 303
    (This page has been left blank intentionally.)

  • Page 304
    ...Governance and Public Policy Committee Executive Vice President of Worldwide Government, Legal and Business Affairs at MacAndrews & Forbes Holdings Inc. HIKMET ERSEK Director and non-voting member of the Compliance Committee President and Chief Executive Officer, The Western Union Company ROBERTO...

  • Page 305
    ...$15.32 TRANSFER AGENT AND REGISTRAR Stockholders with questions concerning their stock holdings or dividends or with address changes should contact: Wells Fargo Bank, N.A. Shareowner Services PO Box is 64854 St. Paul, MN 55164-0854 SHAREOWNER RELATIONS PHONE NUMBERS +1-651-450-4064 +1-800-468-9716...

  • Page 306