First Data 2007 Annual Report Download - page 153

ITEM 11. EXECUTIVE COMPENSATION
FIRST DATA CORPORATION
COMPENSATION DISCUSSION AND ANALYSIS
FISCAL YEAR 2007
INTRODUCTION
On April 1, 2007, First Data Corporation entered into an Agreement and Plan of Merger with New Omaha Holdings L.P. and Omaha Acquisition Corporation.
New Omaha Holdings L.P. (subsequently renamed First Data Holdings Inc.) and Omaha Acquisition Corporation are affiliates of Kohlberg Kravis Roberts &
Co. L.P. This merger was completed on September 24, 2007. At that time, shares of First Data Corporation ceased to be listed on the New York Stock
Exchange and all incumbent Board members, including the entire Compensation Committee resigned. A new Board of Directors was elected and new
Compensation Committee appointed.
The September 24, 2007 merger that resulted in First Data Corporation becoming a subsidiary of First Data Holdings Inc. precipitated several significant
events described within this discussion and whose compensation impact is reported in the compensation disclosures. First, at the time of the merger, all
existing restricted shares held by executives became fully vested and exchanged for cash (at a price of $34.00 per share) while all vested and unvested stock
options were cancelled and exchanged for their in-the-money cash value (based on the difference between $34.00 and the option strike price). Second, First
Data's Chief Executive Officer, Henry (Ric) Duques, retired and Michael Capellas became Chairman and Chief Executive Officer. Third, several executive
officers departed the Company and received benefits as described in First Data's Severance/Change-in-Control policy. As a result, the 2007 compensation
tables reported in the 10-K are not reflective of a typical year in terms of the types of compensation reported as well as the makeup of the executives reported.
However, the Company's overall compensation approach remains consistent. Any aspects of the Company's executive compensation philosophy, strategy,
process and programs that have changed during 2007 as a result of the merger are addressed within the appropriate sections of the following discussion.
ROLE OF THE COMPENSATION AND BENEFITS COMMITTEE
The Compensation and Benefits Committee (the "Committee") reviews and approves all aspects of First Data's compensation programs for its executive
officers. Specifically, under its charter, the Committee is tasked with:
• establishing First Data's compensation philosophy;
• evaluating performance and setting compensation for First Data's executive officers;
• overseeing regulatory compliance with respect to compensation matters; and
• delegating to and monitoring various subcommittees with responsibility for administrative and legal compliance for retirement and benefit plans.
Prior to the merger, the Committee charter also included the following items:
• recommending compensation to the Board for Non-Executive directors; and
• reviewing management's succession plans.
Prior to the merger, the Committee was comprised of three independent directors: Daniel P. Burhnam (Chairperson), David A. Coulter and Charles T. Russell.
Following the merger, the Board appointed a new Committee comprised of Scott Nuttall, Tagar Olson and James Fisher, each of whom is affiliated with
Kohlberg Kravis Roberts & Co. L.P. and, therefore, is not deemed an independent director.
ROLE OF MANAGEMENT
First Data's management provides information, data, analysis, updates and recommendations to the Committee. Specifically, management provides
recommendations of pay levels for executive officers other than the CEO. Finally, management is responsible for the administration of First Data's executive
compensation programs and policies.
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