Western Union 2014 Annual Report Download - page 92

The Western Union Company – Proxy Statement | 74
Proposal 2 PROXY STATEMENT
NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT
•฀ What We Don’t Do:
ûNo change-in-control tax gross ups for individuals
promoted or hired after April 2009. Mr. Ersek is the only
Company employee who remains eligible for excise tax
gross-up payments.
ûNo repricing or buyout of underwater stock options.
ûProhibition against pledging and hedging of Company
securities by senior executives and directors.
ûNo dividends or dividend equivalents accrued or paid
on performance-based restricted stock unit awards or
time-based restricted stock unit awards.
Recent Compensation Actions
For 2014, many of the compensation decisions were
designed to further align the Company’s executive
compensation program with the Company’s future growth
and strategic operating plans and the interests of our
executives with those of our stockholders. Specifically, the
Compensation Committee approved several modifications
to the compensation program to further align the executive
compensation program with evolving investor preferences,
executive compensation practices and market trends.
These decisions included:
• No Executive Base Salary Increases for 2013 or
2014: Other than with respect to executive promotions,
there were no changes in our named executive officers’
base salary levels for 2013 or 2014 from the levels
effective March 2012.
• Created Standalone TSR Performance-Based
Restricted Stock Units: We replaced the TSR modifier
from our 2013 Long-Term Incentive Plan design with
a standalone TSR PSU in order to enhance focus on
stockholder returns. These TSR PSUs require the Company
to achieve 60th percentile relative TSR performance versus
the S&P 500 Index over a three-year performance period
in order to earn target payout, with 30th percentile relative
TSR performance resulting in threshold payout and 90th
percentile relative TSR resulting in maximum payout.
• Increased Performance Period for Performance-
Based Restricted Stock Units: We increased the
performance period of our performance-based
restricted stock units so that they will be subject to
a three-year total performance period, versus the
two-year performance period used in prior years.
• Diversified Long-Term Incentive Plan Mix and
Increased Weighting of At-Risk Awards: We
increased the percentage of our annual equity
grants that have vesting provisions that are strictly
performance-based and at-risk. For 2014, the annual
equity awards under the Long-Term Incentive Plan
consisted of 80% performance-based restricted stock
units (60% Financial PSUs, incorporating both revenue
and operating income growth, and 20% TSR PSUs) and
20% stock options, as compared to 67% performance-
based restricted stock units and 33% stock options
in 2013.
• Established Goals Exceeding Performance During
Prior Three Years: The financial performance target
objectives for the 2014 compensation program were
set at constant currency growth rates that are higher
than the Company’s average annual constant currency
results achieved over 2011 through 2013. The 2014
Annual Incentive Plan financial performance target
objectives were also set higher than the constant
currency financial performance target objectives and
actual results under the 2013 Annual Incentive Plan. For
the 2014 Annual Incentive Plan, performance at 184%
of the target revenue growth rate and at 200% of the
target operating income growth rate is required for a
maximum payout equal to 150% of the target award.
Further, the Company’s relative TSR performance
rank versus the S&P 500 Index over the 2014-2016
performance period that is required to earn a target
payout under the 2014 TSR PSUs is higher than the
Company’s annual relative TSR performance versus the
S&P 500 Index in each of 2011, 2012, and 2013.
• Reduced Maximum Payout Under Annual
Incentive Plan: The Compensation Committee reduced
the maximum payout opportunity under the Annual
Incentive Plan to 150% of target, as compared to the
200% of target maximum payout opportunity that was
used in prior years.
• Reduced Severance Benefits Under Executive
Severance Policy: During 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.