Western Union 2014 Annual Report Download - page 100

The Western Union Company – Proxy Statement | 82
Proposal 3 PROXY STATEMENT
NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT
Clawback of Awards
Except to the extent prohibited by law, awards granted
under the 2015 Plan and any cash payment or shares of
Common Stock delivered pursuant to an award are subject
to forfeiture and recovery by the Company pursuant to any
clawback or recoupment policy which the Company may
adopt from time to time, including any policy which the
Company may be required to adopt under the Dodd-Frank
Act or as otherwise required by law.
New Plan Benefits
The number of stock options and other forms of
awards that will be granted under the 2015 Plan is not
currently determinable.
U.S. Federal Income Tax Consequences
The following is a brief summary of certain United States
federal income tax consequences generally arising with
respect to awards under the 2015 Plan. This discussion
does not address all aspects of the United States federal
income tax consequences of participating in the 2015
Plan that may be relevant to participants in light of their
personal investment or tax circumstances and does
not discuss any state, local or non-United States tax
consequences of participating in the 2015 Plan. Each
participant is advised to consult his or her personal tax
advisor concerning the application of the United States
federal income tax laws to such participant’s particular
situation, as well as the applicability and effect of any
state, local or non-United 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 and the corporation’s
three most highly compensated executive officers
other than the chief executive officer and the chief
financial officer. However, “qualified performance-
based compensation” is not subject to the $1 million
deduction limit. To qualify as qualified performance
based-compensation, the following requirements must
be satisfied: (i) the performance goals are determined by
a committee consisting solely of two or more “outside
directors,” (ii) the material terms under which the
compensation is to be paid, including the employees
eligible to receive compensation, the business criteria on
which the performance goals are based and either the
maximum amount of compensation that could be paid
to any employee or the formula used to calculate the
amount of compensation to be paid to the employee
if the performance goal is attained, are approved by
the corporation’s stockholders, and (iii) the committee
certifies that the applicable performance goals are satisfied
before payment of any qualified performance-based
compensation is made. The Plan Committee currently
consists solely of “outside directors” for purposes
of Section 162(m) of the Code. As a result, certain
compensation under the 2015 Plan, such as that payable
with respect to options and SARs, is not expected to
be subject to the $1 million deduction limit, but other
compensation payable under the 2015 Plan, such as
any Stock Award that is not subject to Section 162(m)
performance measures, would be subject to such limit.
Stock Options
A participant will not recognize taxable income at the time
an option is granted and the Company will not be entitled
to a tax deduction at that time. A participant will recognize
compensation taxable as ordinary income (and subject to
income tax withholding in respect of an employee) upon
exercise of a non-qualified stock option equal to the excess
of the fair market value of the shares purchased over their
purchase price, and the Company will be entitled to a
corresponding deduction. A participant will not recognize
income (except for purposes of the alternative minimum
tax) upon exercise of an incentive stock option. If the
shares acquired by exercise of an incentive stock option
are held for at least two years from the date the option
was granted and one year from the date it was exercised,
any gain or loss arising from a subsequent disposition of
those shares will be taxed as long-term capital gain or loss,
and the Company will not be entitled to any deduction.
If, however, such shares are disposed of within the above-
described period, then in the year of that disposition
the participant will recognize compensation taxable as
ordinary income equal to the excess of the lesser of (1) the