Western Union 2014 Annual Report Download - page 64

Compensation Discussion and Analysis PROXY STATEMENT
The Western Union Company – Proxy Statement | 46
NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT
Element Key Characteristics
Why We Pay
This Element
How We
Determine Amount 2014 Decisions
Stock options Non-qualified stock
options granted with
an exercise price at fair
market value on the
date of grant that expire
10 years after grant and
become exercisable in
25% annual increments
over a four-year vesting
period.
Coupled with
performance-based
restricted stock units,
aligns the interests of
executives with those
of our stockholders by
focusing the executives
on long-term objectives
over a multi-year period,
including stock price
growth.
Internal pay equity,
market practice and
individual performance.
Stock options represent
20% of the long-
term grant value, as
compared to a 33%
weighting in 2013.
See pages 49-50.
Restricted stock
units
Restricted stock units
that generally vest in
25% annual increments
over a four-year
vesting period.
Granted as promotion
grants or in recognition
of prior year performance
and for retention
purposes.
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
program elements is described in further detail below
and individual compensation decisions are discussed in
“-Compensation of Our Named Executive Officers.”
Base Salary
Our philosophy is that base salaries should meet the
objectives of attracting and retaining the executives
needed to lead the business. Base salary is a fixed
compensation component payable in cash. In setting base
salary levels, the committee considered the peer group and
survey data as well as the performance of the individual
executive. During 2014, Messrs. Agrawal and Almeida
received increases in their base salary levels in connection
with their respective promotions. None of our other
named executive officers have received a salary increase
from the levels established in March 2012 (or, if later, the
executive’s date of hire). Please see “-Compensation of
Our Named Executive Officers” for further information
regarding the 2014 base salary levels.
Annual Incentive Compensation
Our Annual Incentive Plan is designed to motivate
and reward executive officers for achieving short-term
performance objectives. The Annual Incentive Plan design
is intended to provide annual incentive awards that
qualify as “performance-based compensation” under
Section 162(m) of the Internal Revenue Code. Participants
in the Annual Incentive Plan in 2014 were Mr. Ersek and
the Company’s Executive Vice Presidents, which included
all of the named executive officers.
Compensation under the Annual Incentive Plan is intended
to be a significant component of an executive’s total
compensation opportunity in a given year, helping create
a “pay for performance” culture. Annual Incentive Plan
compensation holds executives accountable and rewards
them based on the Company’s performance.
In connection with its annual review of the Company’s
executive compensation program, the Compensation
Committee approved the following design changes to the
Annual Incentive Plan in order to further enhance the pay-
for-performance aspect of this program and further align
the interests of executives with those of our stockholders:
• Approvedfinancialperformancetargetobjectivesunder
the 2014 Annual Incentive Plan that were set higher
than the constant currency financial performance target
objectives and actual results under the 2013 Annual
Incentive Plan; and
• Strengthenedtheemphasisonfinancialperformance
metrics by increasing the weighting of financial
performance metrics in the determination of payouts
under the Annual Incentive Plan.
The Compensation Committee also modified the
2014 Annual Incentive Plan design by reducing the
maximum payout opportunity from 200% of target to