Western Union 2015 Annual Report Download - page 60

NOTICE OF 2016 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT
42 | The Western Union Company
COMPENSATION DISCUSSION AND ANALYSIS
ELEMENT KEY CHARACTERISTICS WHY WE PAY THIS ELEMENT HOW WE DETERMINE AMOUNT 2015 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 PSUs,
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 appreciation.
Internal pay equity,
market practice
and individual
performance.
Stock options
represent 20% of the
long-term grant value.
See pages 45-47.
Restricted stock
units
Restricted stock units
that generally vest in
25% annual increments
over a four-year vesting
period.
Granted for retention
purposes.
Internal pay equity,
market practice
and individual
performance.
One of our named
executive officers
received a restricted
stock unit grant in
2015.
See pages 45-47 and
49-51.
Each of Western Union’s 2015 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 2015,
each of our named executive officers other than Mr. Ersek
received base salary increases ranging from 2% to 8% in
order to further align our executive officer compensation
levels with market data. Other than with respect to executive
promotions, our named executive officers did not receive
base salary increases for 2013 or 2014 from the levels
effective March 2012. Please see “—Compensation of Our
Named Executive Officers” for further information regarding
the 2015 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 2015 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.