Western Union 2014 Annual Report Download - page 279

2014 FORM 10-K
THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
141
16. Stock Compensation 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 others who perform services for
the Company. A maximum of 120.0 million shares of common stock may be awarded under the 2006 LTIP, of which 37.5 million
shares are available as of December 31, 2014.
Options granted under the 2006 LTIP are issued with exercise prices equal to the fair market value of Western Union common
stock on the grant date, have 10-year terms, and typically vest over four equal annual increments beginning 12 months after the
date of grant, with the exception of options granted to retirement eligible employees, which generally will vest on a prorated basis,
upon termination. Compensation expense related to stock options is recognized over the requisite service period, which is the same
as the vesting period.
Restricted stock units under the 2006 LTIP that were granted in 2014 typically vest over four equal annual increments beginning
12 months after the date of grant and restricted stock units granted prior to 2014 typically become 100% vested on the three year
anniversary of the grant date. Restricted stock units granted to retirement eligible employees generally vest on a prorated basis
upon termination. The fair value of the awards granted is measured based on the fair value of the shares on the date of grant. Certain
share unit grants do not provide for the payment of dividend equivalents. For those grants, the value of the grants is reduced by
the net present value of the foregone dividend equivalent payments. The related compensation expense is recognized over the
requisite service period, which is the same as the vesting period.
The compensation committee of the Company's Board of Directors has granted the Company's executives and other certain
key employees long-term incentive awards under the 2006 LTIP, which in 2014 consisted of 80% performance-based restricted
stock unit awards and 20% stock option awards and in 2013 consisted of approximately two-thirds performance-based restricted
stock unit awards and approximately one-third stock option awards. The compensation committee granted the remaining non-
executive employees of the Company participating in the 2006 LTIP (other than those non-executive employees receiving the
performance-based restricted stock units described above) annual equity grants consisting solely of restricted stock units for 2014
and in 2013 consisting of two-thirds restricted stock units and one-third stock option awards, or all restricted stock units depending
on their employment grade level.
The performance-based restricted stock units granted in 2014 are restricted stock units, primarily granted to the Company's
executives and consist of two separate awards. The first award consists of performance-based restricted stock units, which require
the Company to meet certain financial objectives during 2014, 2015 and 2016. The second award consists of performance-based
restricted stock units with a market condition tied to the Company's total shareholder return in relation to the S&P 500 index as
calculated over a three-year performance period (2014 through 2016). The actual number of performance-based restricted stock
units that the recipients will receive for the 2014 awards will range from 0% up to 150% of the target number of stock units granted
based on actual financial and total shareholder return performance results. The performance-based restricted stock units granted
in 2013, primarily granted to the Company's executives, are restricted stock units with both performance and market conditions,
which require certain financial objectives to be met during 2013 and 2014 plus an additional vesting period and are subject to a
payout modifier based on the Company's relative total shareholder return in relation to the S&P 500 index as calculated over a
three year performance period (2013 through 2015). The grant date fair value of the performance-based restricted stock units is
fixed and the amount of restricted stock units released depends upon certain financial and/or total shareholder return performance
objectives being met over the performance period. The fair value of the performance-based restricted stock units tied solely to
performance conditions is measured similar to the restricted stock units discussed above, while the fair value of the performance-
based restricted stock units that are tied to a market condition are determined using the Monte-Carlo simulation model. Unlike the
performance-based awards tied solely to performance conditions, compensation costs related to awards with market conditions
are recognized regardless of whether the market condition is satisfied, provided that the requisite service period has been completed.