Western Union 2014 Annual Report Download - page 72

Compensation Discussion and Analysis PROXY STATEMENT
The Western Union Company – Proxy Statement | 54
NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT
metric impacted by the executive officer’s misconduct
or fraud. The Board is monitoring this policy to ensure
that it is consistent with applicable laws, including any
requirements under the Dodd-Frank Wall Street Reform
and Consumer Protection Act (the “Dodd-Frank Act”).
Tax Implications of Executive Compensation Program
Under Section 162(m) of the Internal Revenue Code,
named executive officer (other than the Chief Financial
Officer)compensationover$1millionforanyyearis
generally not deductible for United States income tax
purposes. Performance-based compensation is exempt
from the deduction limit, however, if certain requirements
are met. The Compensation Committee structures
compensation to take advantage of this exemption under
Section 162(m) to the extent practicable, while satisfying
the Company’s compensation policies and objectives.
Because the Compensation Committee also recognizes the
need to retain flexibility to make compensation decisions
that may not meet the standards of Section 162(m) when
necessary to enable the Company to continue to attract,
retain, and motivate highly-qualified executives, it reserves
the authority to approve potentially non-deductible
compensation in appropriate circumstances.
Compensation of Our Named Executive Officers
Hikmet Ersek
President and Chief Executive Officer
Mr. Ersek’s 2014 compensation was weighted significantly
toward variable and performance-based incentive pay
over fixed pay, and long-term, equity-based pay over
annual cash compensation, because the Compensation
Committee desired to tie a significant level of Mr. Ersek’s
compensation to the performance of the Company.
The percentage of compensation delivered in the form
of performance-based compensation is higher for
Mr. Ersek than compared to the other named executive
officers because the Compensation Committee believes
that the Chief Executive Officer’s leadership is one of
the key drivers of the Company’s success, and that a
greater percentage of the Chief Executive Officer’s total
compensation should be variable as a reflection of the
Company’s level of performance. Market data provided
by the Compensation Consultant supported this practice
as well. Accordingly, at target-level performance for
2014, Mr. Ersek’s annual compensation was weighted
12% base salary, 17% annual incentive award, and
71% long-term incentive award. Approximately 88%
of Mr. Ersek’s 2014 targeted total annual compensation
varies based on the Company’s performance.
In February 2014, the Compensation Committee set
Mr. Ersek’s 2014 compensation levels, including his 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
to be appropriate, based on market data provided by
the Compensation Consultant, and because his level
of pay reflects his ultimate responsibility to oversee the
performance of the Company.
• Base Salary. For 2014, no changes were made to
Mr. Ersek’s annual base salary. Accordingly, Mr. Ersek’s
annualbasesalaryremainedat$1,000,000.
• Annual Incentive Plan Target and Payout Level. For
2014, no changes were made to Mr. Ersek’s Annual
IncentivePlantargetof$1,500,000.Themaximum
Annual Incentive Plan award that Mr. Ersek could have
earned during 2014 was 150% of Mr. Ersek’s target,
or$2,250,000,ascomparedtoamaximumaward
opportunity of 200% of target that was used in prior
years. The Compensation Committee determined that it
was appropriate to base Mr. Ersek’s award opportunity
under the Annual Incentive Plan on Company financial
and strategic performance objectives and did not
include on individual measures. Mr. Ersek’s 2014 Annual
Incentive Plan award payout was $1,314,800, reflecting
a blended payout of 88% of target based on the
Company’s level of achievement of the corporate and
strategic performance goals.
• Discretionary Bonus. For 2014, the committee
awardedMr.Ersekadiscretionarybonusof$115,000
in recognition of his leadership in enhancing the
Company’s global compliance programs.
• Long-Term Incentive Award. For 2014, no changes were
made to Mr. Ersek’s long-term incentive award target.
Accordingly, Mr. Ersek’s 2014 long-term incentive award
targetremainedat$6,000,000.