Western Union 2015 Annual Report Download - page 242

THE WESTERN UNION COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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16. Stock Compensation Plans
Stock Compensation Plans
The Western Union Company 2006 Long-Term Incentive Plan and 2015 Long-Term Incentive Plan
The Western Union Company 2015 Long-Term Incentive Plan ("2015 LTIP"), approved on May 15, 2015, provides for the
granting of stock options, restricted stock awards and units, unrestricted stock awards and units, and other equity-based awards to
employees and non-employee directors of the Company. Prior to this, equity-based awards were granted out of the 2006 Long-
Term Incentive Plan ("2006 LTIP"). Shares available for grant under the 2015 LTIP were 31.5 million as of December 31, 2015.
Options granted under the 2015 LTIP and 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 unit grants typically vest over four equal annual increments beginning 12 months after the date of grant.
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. The majority of stock 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 certain other
key employees long-term incentive awards under the 2015 LTIP and 2006 LTIP, which in 2015 and 2014 consisted of 80%
performance-based restricted stock unit awards and 20% stock option awards. The compensation committee granted the remaining
non-executive employees of the Company participating in the 2015 LTIP and 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 2015 and 2014.
The performance-based restricted stock units granted in 2015 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 2015, 2016 and 2017. 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 (2015 through 2017). The actual number of performance-based restricted stock
units that the recipients will receive for both 2015 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 2014 were designed similar to the 2015 awards described above. The grant date fair value of the performance-based
restricted stock units is fixed and the amount of restricted stock units that will ultimately vest depends upon the level of achievement
of the performance and market conditions over the performance period. The fair value of the performance-based restricted stock
units that are 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 is determined using the Monte-Carlo
simulation model. Unlike the performance-based awards that are 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.
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