First Data 2012 Annual Report Download - page 135

ROLE OF MANAGEMENT
FDC’ s management provides information, data, analysis, updates and recommendations to the Committee. Specifically,
management provides recommendations on pay levels for executive officers other than the Chief Executive Officer (“CEO”) as well
as the design of all material compensation and benefit plans. Finally, management is responsible for the administration of FDC’ s
executive compensation programs and policies.
EXECUTIVE COMPENSATION PROGRAM OBJECTIVES
E
xecutive Compensation Philosophy
FDC’ s executive compensation philosophy and corresponding pay practices are designed to create a strong incentive for FDC
executives to achieve the Company’ s financial and strategic objectives, resulting in increased value for shareholders.
Alignment of the executives’ interests with the interest of shareholders is created via equity compensation and annual incentive
compensation, the value of which is driven by company performance over the long and short term, respectively. 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 four guiding principles. 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 with company performance and creation of shareholder value
• Facilitate equity ownership
• Drive behaviors consistent with FDC’ s core values
• Pay at a competitive market position
Align Compensation with Company Performance and Creation of Shareholder Value
The Committee places a great emphasis on the alignment of compensation with increased shareholder value. The annual cash
incentive and annual equity plans described below primarily drive this alignment.
Annual cash incentives are funded each year on the basis of overall company performance, while equity-based incentives are
designed to provide greater value to executives when they achieve long-term value creation. Together, these elements of
compensation reinforce the relationship between pay and performance.
FDC’ s incentive structure creates a strong incentive for executives to drive company performance over both the short and long
term, while ensuring 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. All executive officers have purchased shares of stock and received
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.
To ensure ongoing competitive compensation for executives and to strengthen long-term alignment, an annual equity grant
p
rogram was established in 2011 and is further described below. Initially, grants under this annual program were below typical public
company market levels due to the unique nature of FDC’ s ownership and overall equity compensation structure. Beginning in 2013
and going forward, equity grant levels will be increased in order to further facilitate significant equity ownership and alignment.
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