Western Union 2015 Annual Report Download - page 82

NOTICE OF 2016 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT
64 | The Western Union Company
EXECUTIVE COMPENSATION
RISK MANAGEMENT AND COMPENSATION
Appropriately incentivizing behaviors which foster the best
interests of the Company and its stockholders is an essential
part of the compensation-setting process. The Company
believes that risk-taking is necessary for continued innovation
and growth, but that risks should be encouraged within
parameters that are appropriate for the long-term health and
sustainability of the business. As part of its compensation
setting process, the Company evaluates the merits of its
compensation programs through a comprehensive review
of its compensation policies and programs to determine
whether they encourage unnecessary or inappropriate risk-
taking by the Company’s executives and employees below
the executive level. Based on this review, the Company has
concluded that the risks arising from its compensation
programs are not reasonably likely to have a material adverse
effect on the Company.
Management and the Compensation Consultant review the
Company’s compensation programs, including the broad-
based employee programs and the programs tied to the
performance of individual business units. The team maps the
level of “enterprise” risk for each business area, as established
through the Company’s enterprise risk management
oversight process, with the level of compensation risk for
the associated incentive programs. In developing the risk
assessment, the team reviews the compensation programs
within each business area for:
• The mix of fixed versus variable pay;
• The performance metrics to which pay is tied;
• Whether the pay opportunity is capped;
• The timing of payout;
• Whether “clawback” adjustments are permitted;
• The use of equity awards; and
• Whether stock ownership guidelines apply.
Annual incentive awards and long-term incentive awards
granted to executives are tied primarily to corporate
performance goals, including revenue, operating income
growth, and strategic performance objectives. These
metrics encourage performance that supports the business
as a whole. The executive annual incentive awards include
a maximum payout opportunity equal to 150% of target.
Our executives are also expected to meet share ownership
guidelines in order to align the executives’ interests with those
of our stockholders. Also, the Company’s clawback policy
permits the Company to recover incentive compensation
paid to an executive officer if the compensation resulted
from any financial result or metric impacted by the executive
officer’s misconduct or fraud. This policy helps to discourage
inappropriate risks, as executives will be held accountable for
misconduct which is harmful to the Company’s financial and
reputational health.