First Data 2007 Annual Report Download - page 155

Paying for Performance
At First Data, "paying for performance" means that a significant portion of executive compensation is "at risk." As detailed below, short-term annual cash
incentives are contingent on individual and company performance while long-term equity incentives are contingent on the creation of shareholder value.
Together, these elements of compensation reinforce the relationship between pay and performance.
Driving Behaviors Consistent with First Data's Core Values
First Data is entrusted with highly sensitive and confidential customer information and therefore requires the highest level of integrity from its employees.
Conformance with First Data's core values is critical and is evaluated along with business and individual performance when determining executive officer
compensation. Actual awards can be reduced for failure to demonstrate the core values. First Data's values include:
• embodying the highest ethical standards;
• satisfying clients by always exceeding their expectations; and
• treating people with respect and dignity.
Paying at a Competitive Market Position
First Data and the Committee review the Company's executive compensation practices and targets on an annual basis against a peer group of companies
having similar revenue size, market capitalization, growth, employee size, and industry characteristics. First Data competes for talent against these peer group
entities and other entities with similar characteristics. The Committee analyzes this information to ensure First Data's compensation programs enable the
Company to attract and retain top executive talent.
In 2007, Mercer Human Resources Consulting ("Mercer") was hired as an independent consultant by the Committee to provide this data and associated
analysis of First Data's competitive positioning. The Committee directed the consultant to use a peer group of fourteen companies. The 2007 peer group
represents companies with similar revenue, industry, and other characteristics to First Data and is representative of the broader universe of companies with
whom First Data competes for talent: 1) Electronic Data Systems Corp; 2) US Bancorp; 3) Computer Sciences Corp; 4) Automatic Data Processing; 5) State
Street; 6) Affiliated Computer Services; 7) Fiserv; 8) Capital One Financial; 9) American Express; 10) Charles Schwab; 11) MasterCard International; 12) RR
Donnelley; 13) Cigna Corporation and 14) Bank of New York.
First Data relies on available information disclosed in proxy statements of these companies in combination with generally available market compensation
survey information. Not all of First Data's executive officers have exact counterparts in other companies and comparable proxy information is not always
available. In some cases, no available market information exists for a position. In those situations, the executive's unique skills, experience, performance, and
comparison to other First Data executives are important considerations in setting target pay levels.
In connection with the merger, the new Chief Executive Officer and the Committee established new base pay and 2008 target bonus levels for the executive
officers. No subsequent adjustments to base pay or bonus targets have been made for any executive officers for 2008 and therefore no new peer group
compensation data has been reviewed by the Committee in regards to 2008 compensation levels.
ELEMENTS OF COMPENSATION
Compensation for First Data's executive officers is delivered through:
• base Salary;
• annual cash incentives;
• equity;
• perquisites;
• non-qualified deferred compensation (pre-merger only);
• retirement plans.
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