First Data 2011 Annual Report Download - page 144

Equity
The equity compensation program is intended to align long-term compensation opportunities with the interests of beneficial
shareholders of the Company. 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 beneficial shareholders.
2007 Equity Plan
The 2007 Equity Plan allowed executives to invest in Holdings by purchasing shares of restricted common stock. For each share
of stock purchased, a proportional amount of stock options was granted. Prior to 2011, the Holdings Committee approved such share
purchases and option grants for all executive officers.
In February 2011, an additional share purchase and option grant was approved for Mr. Winborne subsequent to his 2010
appointment as Chief Financial Officer. Mr. Winborne was granted 887,500 stock options on February 1, 2011, of which, one half
have time-based vesting over a five year period and one half have performance based vesting subject to FDC's attainment of the
following EBITDA targets by 2013.
EBITDA Target Vesting %
$ 2.8 Billion 25%
$ 3.1 Billion 75%
$ 3.4 Billion 100%
2011 Equity Awards
In 2011, the Holdings Committee implemented an annual equity grant program for FDC executives in order maintain a more
competitive overall total compensation structure and promote long-term retention of key talent. Annual grants will be made on a
discretionary basis, with amounts determined in the sole discretion of the Holdings Committee based on each executive's role and
performance. Per his employment agreement, Mr. Judge has an annual equity award target value of $1,000,000. Mr. Judge's 2011
award was pro-rated based on his October 1, 2010 hiring.
2011 grants were made half in time-vested options and half in restricted stock awards, based on the grant date fair value of $3
per share of stock and a grant of two options for each share of restricted stock granted. Equity awards made pursuant to this structure
in 2011 were made under the 2007 Equity Plan. Restricted shares vest upon the later of three years from grant date or a liquidity
event, as defined by the plan. Time options vest one-third per year over a three year period from the grant date.
The following equity awards were approved for executive officers in March 2011:
Stock Option
Grant
Restricted
Stock Award
Jonathan J. Judge 83,333 41,667
Edward A. Labry III 200,000 100,000
John Elkins 160,000 80,000
Ray E. Winborne 160,000 80,000
Kevin Kern 175,000 87,500
The Committee believes that annual equity grants in conjunction with: (1) personal investments by senior executives in
Holdings stock with a long holding period, (2) making a proportional one-time grant of stock options with a relatively long five year
vesting period, and (3) performance-based vesting requirements on one half of all investment-matching options granted, is an effective
approach to align the interests of executives and shareholders, as well as maximize teamwork, retention and motivation within the
executive team.
General Provisions for Options and Purchased Shares under the 2007 Equity Plan
Options granted in 2010 and prior: Vesting of all time options is fully accelerated upon a Change in Control or a Liquidity
Event, as defined in the 2007 Equity Plan. Vesting of all performance options is fully accelerated upon a Change in Control or a
Liquidity Event only if one of the following conditions is also met: (a) the Sponsor IRR (as defined in the 2007 Equity Plan) is
achieved, or (b) the Sponsor Return (as defined in the 2007 Equity Plan) is achieved.
Options granted in 2011: Initial Public Offering ("IPO") or sale of First Data has no impact on options vesting unless the
Sponsor's (KKR's) stake drops to a level below 10% of their original investment. If it does, then all options granted in 2011 become