First Data 2010 Annual Report Download - page 139

Download and view the complete annual report

Please find page 139 of the 2010 First Data annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 178

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176
  • 177
  • 178

Table of Contents
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. Other than base pay, FDC offers few non-performance based elements of compensation, such as
executive benefits and perquisites.
When considering the design of FDC compensation plans, incentive plan funding schemes, and individual compensation decisions, the Committee
carefully considers each of the following five guiding principles of FDC's executive compensation programs. These objectives work together to bring an
appropriate balance to FDC compensation programs and have remained a consistent guide for the Committee over the last several years.
• Align compensation opportunities with creation of increased shareholder value
• Facilitate equity ownership
• Pay for individual and company performance
• Drive behaviors consistent with FDC's core values
• Pay at a competitive market position
Align Compensation Opportunities with Creation of Increased Shareholder Value
The Committee places a great emphasis on the alignment of compensation with increased shareholder value. The annual cash incentive and equity plans
described below are the primary means which drive this alignment.
FDC's long-term incentive structure is designed to provide value to executives only if they achieve long-term value creation. Thus, the Committee
views this compensation structure as a strong incentive to drive company performance. In addition, this structure mitigates incentives to create short-term
value at the expense of long-term value, and ensures alignment between long-term shareholder and executive interests.
Facilitate Equity Ownership
The 2007 Stock Incentive Plan for Key Employees of First Data Corporation and its Affiliates (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 Holdings. The Holdings Committee believes that by requiring a personal investment in Holdings, the 2007 Equity Plan is a powerful mechanism to
facilitate equity ownership and closely align executive and shareholder interests. Beginning in 2011, the Holdings Committee expects to make an annual
equity grant to executives to further reinforce this alignment.
Pay for Individual and Company Performance
At FDC, annual cash incentives are contingent on individual and company performance while long-term equity incentives are completely contingent on
the creation of shareholder value. Together, these elements of compensation reinforce the relationship between pay and performance.
Drive Behaviors Consistent with FDC's Core Values
FDC is entrusted with highly sensitive and confidential customer information and therefore requires the highest level of integrity from its employees.
During 2010, FDC updated its vision, mission and core values to reflect FDC's purpose, long-term vision and the global employee attitudes and attributes that
drive the Company's success in the marketplace. FDC's five core values are: Put Customers First, Empower our People, Act with Integrity, Deliver Excellence
and Enjoy the Journey.
Executive behavior is considered by the Committee when determining annual executive incentive awards and all other compensation decisions.
Furthermore, FDC's annual objectives and strategies are closely aligned with FDC's vision, mission and values. Success against these objectives and strategies
is a key consideration in the Committee's evaluation of overall company performance.
Pay at a Competitive Market Position
FDC and the Committee review the Company's executive compensation practices and targets against a peer group of companies on an annual basis.
FDC's current competitive positioning and the impact future decisions may have on such positioning are evaluated. The peer group reflects direct business
competitors and companies with which FDC competes for talent.
In 2010, Frederic W. Cook & Company, Inc. ("FW Cook") was hired as an independent consultant to recommend an updated peer group for FDC. FW
Cook also provided compensation data for FDC's peer group and an analysis of FDC's competitive positioning. The Committee reviews this information to
ensure FDC's compensation programs enable the Company to attract and retain top executive talent.
138