First Data 2008 Annual Report Download - page 207

Alignment of the executives' interests with the interest of shareholders is created via a primary emphasis on equity compensation, followed by a
secondary emphasis on annual incentive compensation. Non-performance based elements of compensation, such as executive benefits and perquisites, which
do not create any additional performance incentive or shareholder alignment, are not emphasized within the Company's executive compensation philosophy or
practices.
First Data aligns itself aggressively in the marketplace on a total compensation basis to be able to attract and retain senior leaders. In order to achieve
the desired market positioning in a manner consistent with the Company's compensation philosophy, First Data aims to provide executive officers with base
pay opportunities at median levels and short-term cash incentive opportunities at approximately the 75th percentile.
As a result of becoming privately owned, the Company's equity program is difficult to compare to the Company's competitor group. However, the
Company believes that it is a very competitive and performance-based program providing executive officers with maximum incentive to build shareholder
value. The equity program is discussed in detail in the Equity portion of the Elements of Compensation section.
EXECUTIVE COMPENSATION PROGRAM OBJECTIVES
First Data's executive compensation objectives listed below have not changed from 2007 to 2008:
• aligning compensation with increased shareholder value;
• facilitating equity ownership;
• paying for performance;
• driving behaviors consistent with First Data's core values; and
• paying at a competitive market position.
Aligning Compensation to Increased Shareholder Value
As a company with concentrated non-public ownership, the Committee places a great emphasis on the alignment of compensation with increased
shareholder value. This is primarily done through the equity and annual cash incentive plans described below.
Facilitating Equity Ownership
The 2007 Stock Incentive Plan for Key Employees of First Data Corporation (the "2007 Equity Plan") facilitates significant equity ownership by
executive officers. The 2007 Equity Plan allows for executive officers to purchase shares of stock and receive matching grants of stock options in First Data
Holdings Inc. The Committee believes that by requiring a personal investment in the Company, the 2007 Equity Plan is a powerful mechanism to both
facilitate equity ownership and align executive and shareholder interests.
Paying for Performance
At First Data, "paying for performance" means that a significant portion of executive compensation is "at risk." As detailed below, 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. During 2008, First Data adopted a new set of guiding principles
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