First Data 2009 Annual Report Download - page 204

Equity
The objective of FDC’s equity compensation program is to align long-term compensation opportunities with
the interests of FDC’s shareholders. Specifically, the purpose of the 2007 Equity Plan is to promote FDC’s long-
term financial interests and growth by:
• attracting and retaining executives with the experience and abilities required to make a substantial
contribution to the success of the Company;
• rewarding executives for long-term commitment and the creation of value over the long-term;
• motivating executives by means of growth-related incentives tied to achievement of long range goals;
and
• aligning the interests of the Company’s executives with those of the Company’s majority shareholders.
The 2007 Equity Plan allows executives to invest in the Company by purchasing shares of restricted
common stock. For each share of stock purchased, a proportional amount of stock options are granted. In January
2008, the Committee approved share purchases and option grants for all named executive officers, with the
exception of Mr. Shannon and Mr. Schultz who were hired in September 2009.
The Committee believes that the original plan design: (1) allowing executive officers to make a personal
investment in company stock with a long holding period, (2) making a significant one-time grant of stock options
with a relatively long five-year vesting period, and (3) imposing performance-based vesting requirements on half
the options, was an effective approach given circumstances at the time. The plan continues to promote a long-
term growth orientation within FDC’s executive team and generates alignment between the executive team and
shareholders. However, as part of its practice of continually evaluating its compensation programs for senior
management and in light of economic challenges faced since the inception of the 2007 Equity Plan, the Company
has decided to make a change in its approach to long-term incentive compensation. The program under which
members of senior management were invited to invest in common stock of the Company’s parent will be
suspended during the first half of 2010. Those investments will continue to remain in place according to the
terms of the Management Stockholder’s Agreements under which they were made.
Going forward, the Committee will adopt a new LTI structure for executives that may not require
investment by the employee in the common stock of the Company’s parent. Under the proposed new structure
which is still under review, options will be granted at fair market value and subject to a vesting
schedule. Executives who were previously invited to invest but have not yet made an investment nor received the
proportionate grant of stock options, including Mr. Shannon (whose compensation arrangement was disclosed on
September 8, 2009) and Mr. Schultz, will have the ability to either make an investment with a proportional grant
of stock options as initially offered or receive a grant of options. The number of options granted will be
commensurate with each employee’s position, as determined by the Committee. Additional option grants may be
made periodically. Further details regarding the new program and future grants to named executives will be
reported once finalized and adopted. FDC continues to support the approach that an equity plan is a powerful
mechanism to both facilitate equity ownership and closely align executive and shareholder interests.
In September 2009, the Committee approved a one-time special grant of time-vested options with a Fair
Market Value strike price to executive officers in an amount proportional to the number of shares which they
originally purchased under the 2007 Equity Plan. This grant reinforced the Committee’s commitment to using
equity as the chief component of executive compensation and primary driver of alignment between executives
and shareholders. The grant was intended to further strengthen retention, motivation and shareholder alignment
for executives holding only underwater options and purchased shares of stock which had decreased in value since
the time of purchase. All options in this special grant will vest 20% per year on September 23 in each year from
2010 to 2014. Due to an administrative issue, Mr. Wall’s grant made under these terms was issued in December
2009, rather than September 2009.
204