First Data 2012 Annual Report Download - page 140

share price or the option exercise price. This provision greatly enhances the retention of executives who participate in the 2007 Equity
Plan by eliminating all potential option gains for executives who voluntarily terminate prior to a Liquidity Event.
Shares of purchased stock held by executives may not be sold prior to a Liquidity Event. If a shareholder’ s employment is
terminated voluntarily or due to Death, Disability, Good Reason or Not for Cause (as defined in the 2007 Equity Plan), call rights may
be exercised on purchased shares at the fair market value share price. In the event of Death or Disability, the shareholder has a put
right to sell shares back to Holdings at the fair market value share price.
If the shareholder’ s employment is terminated for Cause (as defined in the 2007 Equity Plan), call rights may be exercised on
purchased shares at the lesser of the fair market value share price or the original purchase price.
Restricted Stock Awards/Restricted Stock Units awarded in 2012 will have the restrictions lapse/vest at the later of: (a) three
years from grant date (March 3, 2015), and (b) following an IPO plus any mandatory lock-up period (up to 180 additional days from
IPO).
Grant Process
March 3, 2012 annual equity grants were made under the 2007 Equity Plan, and granted at the then-current fair market value
($3.00) on the date of each grant. Fair market value was determined by the full Holdings Board at the time of grant. Equity grants
were made on the date the grants were approved by the Committee.
Perquisites
FDC’ s compensation philosophy is to focus on performance-based forms of compensation while providing only minimal, but
competitive, executive benefits and perquisites. Reimbursement for relocation and moving expenses and an annual stipend for
personal financial planning are offered to FDC’ s executive officers. Executives are also authorized to use the corporate aircraft for
personal purposes in limited instances.
FDC’ s relocation program is required to attract and retain top talent in a competitive environment. The program ensures a new
or transferred executive can transition into their new work location as quickly and efficiently as possible.
The financial planning benefit is provided as a fixed dollar benefit, grossed-up to cover taxes on the benefit. For the Chief
Executive Officer, the benefit is $20,000 per year. For all other executives, the benefit is $20,000 in their first year as an executive
officer and $10,000 in each subsequent year.
Competitive analysis indicates that the relocation and financial planning benefits are comparable to what is offered by other
companies with whom the Company competes for talent. The Committee reviews the appropriateness of perquisites provided to
executive officers on an annual basis.
Retirement Plans
In 2012, all employees in the U.S., including executive officers, were eligible to participate in the First Data Corporation
Incentive Savings Plan (“ISP”). The ISP is a qualified 401(k) plan designed to comply with Internal Revenue Service (“IRS”) safe
harbor rules. FDC maintains the ISP to allow employees to save for their retirement on a pre-tax basis and provides company
contributions to help employees build retirement savings. FDC offers the ISP not only because it is a market competitive practice, but
it is critical to provide a vehicle for its employees to save for retirement.
The Company matches 100% of employee deferrals up to 3% of eligible pay and 50% of employee deferrals on the next 1% of
eligible pay. Eligible pay includes base and incentive compensation and is capped by IRS limitations applicable to qualified plans.
Company contributions become 100% vested after 2 years of service and there is no service requirement to begin receiving company
matching contributions.
FDC does not currently offer defined benefit plans to new employees, nor does it offer non-qualified retirement plans to its
executive officers.
SEVERANCE AND CHANGE IN CONTROL AGREEMENTS
In general, FDC does not enter into employment agreements with employees, including the Company’ s executive officers,
except in the case of Mr. Judge and Mr. Labry. A description of these agreements is provided below. All current executive officers
serve at the will of the Board.
139