Western Union 2015 Annual Report Download - page 49

NOTICE OF 2016 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT
2016 Proxy Statement | 31
COMPENSATION DISCUSSION AND ANALYSIS
RECENT ENHANCEMENTS TO OUR EXECUTIVE COMPENSATION PROGRAM
Over the years, the Compensation Committee has engaged
in an ongoing review and evaluation of our executive
compensation and benefits programs in relation to our
compensation philosophy and objectives, as described in
“—Establishing and Evaluating Executive Compensation—Our
2015 Executive Compensation Philosophy and Objectives”
below, and the interests of our stockholders. As a result of
that review, including our stockholder engagement efforts,
the Compensation Committee has taken the following
actions over the past few years to enhance our executive
compensation program:
• Created Standalone TSR PSUs: In 2014, to enhance focus
on stockholder returns, we replaced the TSR modifier from
our 2013 long-term incentive design with a standalone
TSR PSU. We maintained this compensation element
as part of our 2015 long-term incentive program. Over a
three-year performance period, these TSR PSUs require
the Company to achieve 30th, 60th or 90th percentile relative
TSR performance as compared to the S&P 500 Index
in order to earn threshold, target or maximum payout,
respectively.
• Increased Performance Period for PSUs: In 2014, we
increased the performance period of our PSUs to make
them subject to a three-year total performance period,
rather than the two-year performance period used in prior
years. We maintained the three-year performance period
for our 2015 PSUs.
• 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 and 2015, the annual equity awards under
the Long-Term Incentive Plan consisted of 80% PSUs
(60% Financial PSUs, incorporating both revenue and
operating income growth, and 20% TSR PSUs) and 20%
stock options, as compared to 67% PSUs and 33% stock
options in 2013.
• 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.
• Enhanced CEO Stock Ownership Guidelines: In February
2016, the Compensation Committee increased the Chief
Executive Officer’s stock ownership requirement from a
multiple of five times to six times his base salary.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Ersek’s 2015 compensation levels, including his annual
and long-term incentive award targets, remained unchanged
from the levels set in 2012, primarily in light of stock price
performance and challenging market conditions. Further,
Mr. Ersek’s 2015 compensation is below the median
compensation for chief executive officers in the Company’s
peer group used for evaluating 2015 compensation decisions,
based on the most recent publicly available information, as
compiled by the Compensation Committee’s compensation
consultant.
For 2015 performance, Mr. Ersek received a cash payout
under the 2015 Annual Incentive Plan of $1,767,000, reflecting
a blended payout of 118% of target based on the Company’s
achievement of corporate and strategic performance goals
above target levels, as compared to an 88% of target payout
for 2014 performance and an 84% of target payout for
2013 performance. The Compensation Committee based
Mr. Ersek’s award opportunity under the Annual Incentive Plan
on the achievement of corporate and strategic performance
goals and did not include individual performance goals.
The following chart demonstrates that variable, performance-
based pay elements comprised approximately 88% of the
targeted 2015 annual compensation for Mr. Ersek (consisting
of target payout opportunity under the Annual Incentive Plan
and stock option and PSU components under the Long-Term