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Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
You are cordially invited to attend the 2023
Annual Meeting of Stockholders (the “Annual Meeting”) of The Western Union Company (the “Company”), to be held
at 8:00 a.m., local time, on Friday, May 12, 2023, at the Company’s headquarters located at 7001 E. Belleview Avenue, Denver, Colorado
80237. The registration desk will open at 7:30 a.m.
The attached notice and Proxy Statement contain
details of the business to be conducted at the Annual Meeting. In addition, the Company’s 2022 Annual Report, which is being made
available to you along with the Proxy Statement, contains information about the Company and its performance. Directors and certain officers
of the Company will be present at the Annual Meeting.
On behalf of the Board of Directors, I would
like to express our appreciation for your continued interest in the Company.
PROPOSAL
1
ELECTION OF DIRECTORS
At the 2023 Annual Meeting, all director nominees
will be elected for one-year terms.
The terms of each director if elected or re-elected,
as the case may be, will expire at the 2024 Annual Meeting of Stockholders. Each director will hold office until his or her successor
has been elected and qualified or until the director’s earlier resignation or removal. See the “Board of Directors Information”
section of this Proxy Statement for information concerning all nominees.
The Board currently consists of eleven directors.
Richard A. Goodman will retire from the Board effective at the Annual Meeting because he has reached the Board’s mandatory retirement
age, as set forth in the Company’s Corporate Governance Guidelines. Joyce A. Phillips has declined to stand for re-election at the
Annual Meeting. Effective as of the Annual Meeting, the size of the Board will be reduced to nine directors. In light of the departures
of Mr. Goodman and Ms. Phillips from the Board, the Board plans to add at least one gender diverse director by December 2023. The Board
has initiated a director search through a third-party search firm that includes diverse directors.
The Company’s By-Laws require that directors
be elected by the majority of votes cast with respect to such director in uncontested elections (the number of shares voted “for”
a director must exceed the number of votes cast “against” that director, with abstentions and broker non-votes not counted
as cast either “for” or “against”). In a contested election (a situation in which the number of nominees exceeds
the number of directors to be elected), the standard for election of directors will be a plurality of the shares represented in person
or by proxy at any such meeting and entitled to vote on the election of directors.
Under the Company’s By-Laws, if an incumbent
director does not receive the majority of votes cast, the director will promptly tender his or her resignation to the Board of Directors.
The Corporate Governance, ESG, and Public Policy Committee,
or such other committee
as may be designated by the Board of Directors, will make a recommendation to the Board of Directors as to whether to accept or reject
the resignation of such incumbent director, or whether other action should be taken. The Board of Directors will act on the resignation,
taking into account the Corporate Governance, ESG, and Public Policy Committee’s recommendation, and publicly disclose (by a press
release, a filing with the SEC or other broadly disseminated means of communication) its decision regarding the tendered resignation
and the rationale behind the decision within 90 days following certification of the election results. If such incumbent director’s
resignation is not accepted by the Board of Directors, such director will continue to serve until the next annual meeting and until his
or her successor is duly elected or his or her earlier resignation or removal. In the case of a vacancy, the Board of Directors may appoint
a new director as a replacement, may leave the vacancy unfilled or may reduce the number of directors on the Board.Your
shares will be voted as you instruct via the voting procedures described on the Proxy Card or the Notice of Internet Availability of
Proxy Materials, or as you specify on your Proxy Card(s) if you elect to vote by mail. If unforeseen circumstances (such as death or
disability) require the Board of Directors to substitute another person for any of the director nominees, your shares will be voted for
that other person.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE TO RE-ELECT MR. COLE, MS. HOLDEN, MR. JOERRES, MR. MCGRANAHAN, MR. MILES, MR. MURPHY, MR. SIEGMUND, MS. SUN, AND MR. TRUJILLO, EACH TO SERVE UNTIL THE 2024 ANNUAL MEETING OF STOCKHOLDERS OR UNTIL HIS OR HER RESPECTIVE SUCCESSOR IS ELECTED AND QUALIFIED. |
14 | The
Western Union Company
CORPORATE
GOVERNANCE
SUMMARY OF CORPORATE
GOVERNANCE PRACTICES
The Board of Directors believes that strong corporate
governance is key to long-term stockholder value creation. Over the years, our Board of Directors has responded to evolving governance
standards by enhancing our practices to best serve the interests of the Company’s stockholders, including:
| ü | Annual election of directors. |
| ü | Proxy access. Our By-Laws permit qualifying
stockholders or groups of qualifying stockholders that have each beneficially owned at least 3% of the Company’s Common Stock for
three years to nominate up to the greater of (x) two or (y) an aggregate of 20% of the members of the Board and have information and supporting
statements regarding those nominees included in the Company’s Proxy Statement. |
| ü | Majority vote standard in uncontested elections.
In an uncontested election, each director must be elected by a majority of votes cast, rather than by a plurality. |
| ü | Stockholder right to call special meetings
at 10% ownership threshold. |
| ü | No stockholder rights plan (“poison pill”). |
| ü | No supermajority voting provisions in the Company’s
organizational documents. |
| ü | Independent Board, except our CEO. Our
Board is comprised of all independent directors, except our CEO. |
| ü | Independent non-executive chair. The Chair
of the Board of Directors is a non-executive independent director. |
| ü | Independent Board committees. All of our
Board Committees are made up of independent directors. Each standing committee operates under a written charter that has been approved
by the Board. |
| ü | Confidential stockholder voting. The Company’s
Corporate Governance Guidelines provide that the vote of any stockholder will not be revealed to anyone other than a non-employee tabulator
of votes or an independent election inspector, except under circumstances set forth in the Company’s Corporate Governance Guidelines. |
| ü | Board Committee authority to retain independent
advisors. Each Board Committee has the authority to retain independent advisors. |
| ü | Robust codes of conduct. The Company is
committed to operating its business with honesty and integrity and maintaining the highest level of ethical conduct. These shared values
are embodied in our Code of Conduct and require that every customer, employee, agent and member of the public be treated accordingly.
The Company Code of Conduct applies to all employees, but the Company’s senior financial officers are also subject to an additional
code of ethics, reflecting the Company’s commitment to maintaining the highest standards of ethical conduct. In addition, the Board
of Directors is subject to a Directors’ Code of Conduct. |
| ü | Board oversight of ESG matters. The Board
oversees Western Union’s ESG strategy development and relevant ESG matters. To assist the Board with its oversight duties: |
| ¡ | The Corporate Governance, ESG, and Public Policy Committee is responsible
for reviewing and advising the Board with respect to ESG matters related to the Company. |
| ¡ | The Audit Committee oversees ESG internal controls and process as well as
integration of ESG risks in the Company’s enterprise risk management framework. |
| ¡ | The Compensation Committee oversees the alignment of the Company’s ESG
strategy with compensation practices. |
| ¡ | The Compliance Committee evaluates executive performance of the Company’s
ESG compensation metric related to compliance. |
The Company has produced an ESG Report annually
since 2018 and intends to continue to do so. The ESG Report for fiscal year 2021 can be found on the Company’s investor relations
website: https://corporate.westernunion.com/esg/.
| ü | Robust stock ownership guidelines for senior
executives and directors. Robust stock ownership requirements for our senior executives and directors strongly link the interests
of management and the Board with those of stockholders. |
2023
Proxy Statement | 15
CORPORATE
GOVERNANCE
| ü | Prohibition against pledging and hedging of
Company stock. The Company’s insider trading policies prohibit the Company’s executive officers and directors from pledging
the Company’s securities and prohibit all employees (including executive officers) and directors from engaging in hedging or short-term
speculative trading of the Company’s securities, including, without limitation, short sales or put or call options involving the
Company’s securities. Please see “Compensation of Directors—Prohibition Against Pledging and Hedging of the Company’s
Securities” and “Compensation Discussion and Analysis—The Western Union 2022 Executive Compensation Program—Prohibition
Against Pledging and Hedging of the Company’s Securities,” below. |
| ü | Regular stockholder engagement. The Company
regularly seeks to engage with its stockholders to better understand their perspectives. |
You can learn more about our corporate governance
by visiting the “Investor Relations, Corporate Governance” portion of the Company’s website, www.westernunion.com,
or by writing to the attention of: Investor Relations, The Western Union Company, 7001 E. Belleview Avenue, WU-HQ-10, Denver, Colorado
80237.
INDEPENDENCE OF DIRECTORS
The Board of Directors has adopted Corporate
Governance Guidelines, which contain the standards that the Board of Directors uses to determine whether a director is independent. A
director is not independent under these categorical standards if:
| - | The director is, or has been within the last three years, an employee of Western Union, or an immediate family member of the director
is, or has been within the last three years, an executive officer of Western Union. |
| - | The director has received, or has an immediate family member who has received, during any 12-month period within the last three years,
more than $120,000 in direct compensation from Western Union, other than director and committee fees and pension or other forms of deferred
compensation for prior service (provided such compensation is not contingent in any way on continued service). |
| - | (i) The director is a current partner or employee of a firm that is Western Union’s internal or external auditor; (ii) the
director has an immediate family member who is a current partner of such a firm; (iii) the director has an immediate family member
who is a current employee of such a firm and personally works on Western Union’s audit; or (iv) the director or an immediate
family member was within the last three years a partner or employee of such firm and personally worked on Western Union’s
audit within that time. |
| - | The director or an immediate family member is, or has been within the last three years, employed as an executive officer of another
company where any of Western Union’s present executive officers at the same time serves or served on that company’s compensation
committee. |
| - | The director is a current employee, or an immediate family member is a current executive officer, of a company that has made payments
to, or received payments from, Western Union for property or services in an amount which, in any of the last three fiscal years, exceeded
the greater of $1 million or 2% of such other company’s consolidated gross revenues. |
| - | The director is a current employee, or an immediate family member is a current executive officer, of a company which was indebted
to Western Union, or to which Western Union was indebted, where the total amount of either company’s indebtedness to the other,
in any of the last three fiscal years, exceeded 5% or more of such other company’s total consolidated assets. |
| - | The director or an immediate family member is a current officer, director, or trustee of a charitable organization where Western Union’s
(or an affiliated charitable foundation’s) annual discretionary charitable contributions to the charitable organization, in any
of the last three fiscal years, exceeded the greater of $1 million or 2% of such charitable organization’s consolidated gross revenues. |
The Board has reviewed the independence of the
current directors under the Company’s categorical standards and the rules of the New York Stock Exchange (the “NYSE”)
and found Mr. Cole, Mr. Goodman, Ms. Holden, Mr. Joerres, Mr. Miles, Mr. Murphy, Ms. Phillips, Mr. Siegmund, Ms. Sun, and Mr. Trujillo
to be independent.
16 | The
Western Union Company
CORPORATE
GOVERNANCE
BOARD LEADERSHIP STRUCTURE
The Board has a non-executive Chair. This position
is independent from management. The Chair sets the agendas for and presides over the Board meetings, as well as meetings of the independent
directors. Our CEO is a member of the Board and participates in its meetings. The Board believes that this leadership structure is appropriate
for the Company at this time because it allows for independent oversight of management, increases management accountability, and encourages
an objective evaluation of management’s performance relative to compensation.
The Board will determine its leadership structure
in a manner that it determines to be in the best interests of the Company and its stockholders at the time. The Chair of the Board and
CEO positions may be filled by the same individual or separated, as deemed appropriate by the Board.
The Chair of the Board, among other things:
| • | presides at, and chairs, Board meetings and meetings of stockholders; |
| • | establishes agendas for each Board meeting in consultation with the chairs of applicable committees of the Board; |
| • | leads executive sessions of the Board; |
| • | has authority to call Board meetings; |
| • | leads the Board in discussions concerning the CEO’s performance and CEO succession; |
| • | approves meeting schedules for the Board; |
| • | approves information sent to the Board; |
| • | if requested by major stockholders, is available for consultation and direct communication; and |
| • | performs such other duties and responsibilities as requested by the Board. |
However, if the Chair of the Board is not independent,
the independent directors of the Board shall elect a Lead Director.
RISK OVERSIGHT
The Board regularly devotes time during its meetings
to review and discuss the most significant risks facing the Company and management’s process for identifying, prioritizing, and
responding to those risks. During these discussions, the CEO, the Chief Legal Officer, the Chief Financial Officer, the Chief Enterprise
Risk Officer, the Chief Compliance Officer (the “CCO”), the Chief Information Security Officer, the Chief Privacy and Data
Governance Officer, and the Chief Internal Auditor present management’s process for assessment of risks, a description of the most
significant risks facing the Company, and any mitigating factors, plans, or policies in place to address and monitor those risks. The
Board has also delegated certain risk oversight responsibilities to its committees.
Our management team, led by the Chief Enterprise
Risk Officer, utilizes a range of processes to identify risks associated with our strategy and business, financial activities and reporting,
legal and regulatory issues, information technology, and people related skills and availability. Information technology risks include
those related to cybersecurity. In 2022, management’s risk assessment process included a cybersecurity risk assessment involving,
among other things, an evaluation of external annual audits (service organization controls (“SOC”) 2 report and payment card
industry (“PCI”) compliance).
Key Board Committee Oversight Responsibilities
Audit Committee. Consistent with the NYSE
listing standards, to which the Company is subject, the Audit Committee bears
responsibility for
oversight of the Company’s policies with respect to risk assessment and risk management and must discuss with management the major
risk exposures facing the Company and the steps the Company has taken to monitor and control such exposures. The Audit Committee is also
responsible for assisting Board oversight of the Company’s compliance with legal and regulatory requirements, which represent many
of the most significant risks the Company faces. During the Audit Committee’s discussion of risk, the Company’s CEO, Chief
Financial Officer, Chief Legal Officer, CCO, the Chief Information Security Officer, the Chief Privacy and Data Governance Officer, Chief
Enterprise Risk Officer, and Chief Internal Auditor present information and participate in discussions with the Audit Committee regarding
risk and risk management. Risks discussed regularly include those related to global economic and political trends, business and financial
performance, legal and regulatory matters, cybersecurity, data privacy, competition, legislative developments, and other matters.Compliance
Committee. While the Board committee with primary oversight of risk is the Audit Committee, the Board has delegated to other committees
the oversight of risks within their areas of responsibility and expertise. For example, in light of the breadth and number of responsibilities
that the Audit Committee must oversee, and the importance of the evaluation and management of the Company’s compliance programs,
policies, and key risk exposures associated with anti-money laundering (“AML”), sanctions, anti-corruption, fraud prevention,
consumer
2023
Proxy Statement | 17
CORPORATE
GOVERNANCE
protection, and privacy laws, including investigations
or other matters that may arise in relation to such laws, the Board formed the Compliance Committee in 2013 to assist the Audit Committee
and the Board with oversight of those areas. This function was previously performed by the Corporate Governance, ESG, and Public Policy
Committee. Oversight of privacy matters was formally added to the Compliance Committee charter in February 2021. The Compliance Committee
reports regularly on these matters to the Board and Audit Committee and during
the
Compliance Committee’s meetings, each of the Chief Legal Officer, CCO, and Chief Privacy and Data Governance Officer regularly
present and participate in discussions.Compensation
Committee. In addition, the Compensation Committee oversees the risks associated with the Company’s compensation practices,
including an annual review of the Company’s risk assessment of its compensation policies and practices for its employees and the
Company’s succession planning process.
COMMITTEES OF THE BOARD
OF DIRECTORS
The current members of each Board Committee are
indicated in the table below.
|
Director |
|
Audit |
|
Corporate
Governance, ESG
and Public Policy |
|
Compensation
and Benefits |
|
Compliance |
|
|
Martin I. Cole |
|
|
|
|
|
|
|
|
|
|
Richard A. Goodman(1) |
|
|
|
|
|
|
|
|
|
|
Betsy D. Holden(2) |
|
|
|
|
|
|
|
|
|
|
Jeffrey A. Joerres |
|
|
|
|
|
|
|
|
|
|
Devin B. McGranahan |
|
|
|
|
|
|
|
|
|
|
Michael A. Miles, Jr. |
|
|
|
|
|
|
|
|
|
|
Timothy P. Murphy |
|
|
|
|
|
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Joyce A. Phillips(3) |
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Jan Siegmund |
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Angela A. Sun(4) |
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Solomon D. Trujillo |
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| | Chair of the Board |
| | Committee Chair |
| | Member |
| (1) | Mr. Goodman will retire from the Board effective at the Annual Meeting because he has reached the Board’s
mandatory retirement age, as set forth in the Company’s Corporate Governance Guidelines. |
| (2) | On February 23, 2023, the Board appointed Ms. Holden Chair of the Corporate Governance, ESG, and Public
Policy Committee. |
| (3) | Ms. Phillips has declined to stand for re-election at the Annual Meeting. |
| (4) | On February 23, 2023, the Board appointed Ms. Sun to the Compensation and Benefits Committee and removed
her from the Compliance Committee. |
18 | The
Western Union Company
CORPORATE
GOVERNANCE
BOARD AND COMMITTEE GOVERNING DOCUMENTS |
Each committee operates under a charter approved
by the Board. The Company’s Audit Committee Charter, Compensation and Benefits Committee Charter, Corporate Governance, ESG, and
Public Policy Committee Charter, Compliance Committee Charter, and Corporate Governance
Guidelines are available without charge through
the “Investor Relations, Corporate Governance” portion of the Company’s website, www.westernunion.com, or by
writing to the attention of: Investor Relations, The Western Union Company, 7001 E. Belleview Avenue, WU-HQ-10, Denver, Colorado 80237.
Audit
Committee |
|
“During 2022, the Audit Committee continued to oversee financial reporting, internal
audit, and legal and regulatory matters, with a strong focus on the Company’s controls, culture of compliance, and enterprise risk
management. The Committee is continuing to focus on these areas and risk management and mitigation, with an emphasis on the Company’s
cybersecurity, technology, and data privacy maturity.”
Jan Siegmund, Committee Chair |
|
|
|
Additional Committee Members: Richard
A. Goodman, Timothy P. Murphy, Angela A. Sun, and Solomon D. Trujillo
Meetings Held in 2022: 8
Primary Responsibilities: Pursuant to
its charter, the Audit Committee assists the Board of Directors in fulfilling its oversight responsibilities with respect to:
• integrity
of the Company’s consolidated financial statements;
• compliance
with legal and regulatory requirements;
• review
of the Company’s guidelines and policies that govern the process by which the Company goes about assessing and managing its exposure
to risks;
• the independent
registered public accounting firm’s qualifications, independence and compensation;
• review
of critical accounting matters with the independent registered public accounting firm; and
• performance
of the Company’s internal audit function and independent registered public accounting firm.
Independence: Each member of the Audit Committee
meets the independence requirements of our Corporate Governance Guidelines, the NYSE and the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), and as the Board has determined, has no material relationship with the Company. Each member of the Audit
Committee is financially literate, knowledgeable, and qualified to review financial statements. The Board has designated Mr. Siegmund
as a “financial expert” as defined by Item 407(d) of Regulation S-K.
Service on Other Audit Committees: No director
may serve as a member of the Audit Committee if such director serves on the audit committees of more than two other public companies,
unless the Board determines that such simultaneous service would not impair the ability of such director to effectively serve on the Audit
Committee. Currently, none of the Audit Committee members serve on more than two other public company audit committees. |
2023
Proxy Statement | 19
CORPORATE
GOVERNANCE
Compensation and Benefits Committee |
|
“In 2022, the Compensation and Benefits Committee continued to focus on pay-for-performance
to set the foundation for the Company’s new strategy through the Company’s executive compensation program. The Committee also
established compensation arrangements for several executives hired to support the new strategy.”
Michael A. Miles, Jr., Committee Chair |
|
|
|
Additional Committee Members: Martin I.
Cole, Richard A. Goodman, Betsy D. Holden, Joyce A. Phillips, and Angela A. Sun
Meetings Held in 2022: 5
Primary Responsibilities: Pursuant to
its charter, the Compensation Committee has the authority to administer, interpret, and take any actions it deems appropriate in connection
with any incentive compensation or equity-based plans of the Company, any salary or other compensation plans for officers and other key
employees of the Company, and any employee benefit or fringe benefit plans, programs, or policies of the Company. Among other things,
the Compensation Committee is responsible for:
• in consultation
with senior management, establishing the Company’s general compensation philosophy, and overseeing the development and implementation
of compensation and benefits policies;
• reviewing
and approving corporate goals and objectives relevant to the compensation of the CEO and other executive officers, evaluating the performance
of the CEO and other executive officers in light thereof, and setting compensation levels and other benefits for the CEO (with the ratification
by the independent directors of the Board) and other executive officers based on this evaluation;
• overseeing
the Company’s regulatory compliance with respect to compensation matters;
• reviewing
and making recommendations to the Board regarding severance or similar termination agreements with the Company’s CEO or to any person
being considered for promotion or hire into the position of CEO;
• approving
grants and/or awards of options, restricted stock, restricted stock units, and other forms of equity-based compensation under the Company’s
equity-based plans;
• developing
and implementing policies with respect to the recovery or “clawback” of any excess compensation paid to any executive officers
based on erroneous data;
• reviewing
with management and preparing an annual report regarding the Company’s Compensation Discussion and Analysis to be included in the
Company’s Proxy Statement and Annual Report;
• determining
stock ownership guidelines for the Company’s directors and monitoring compliance with such guidelines;
• in consultation
with the CEO, reviewing management succession planning;
• reviewing
and recommending to the Board of Directors compensation for non-employee directors; and
• periodically
reviewing the overall effectiveness of the Company’s principal strategies related to human capital management, recruiting, retention,
career development, and diversity.
The Compensation Committee has the authority to delegate
all or a portion of its duties and responsibilities to a subcommittee and, in some situations, may also delegate its authority and responsibility
with respect to certain compensation and benefit plans and programs to one or more employees.
Independence: Each
member of the Compensation Committee meets the independence requirements of our Corporate Governance Guidelines, the NYSE, the Exchange
Act and such other independence or other requirements as may be applicable from time to time, and as the Board has determined, has
no material relationship with the Company. |
20 | The
Western Union Company
CORPORATE
GOVERNANCE
Compliance Committee |
|
“The Compliance Committee shares with regulators the goals of protecting consumers
and the integrity of the global money transfer network and remains at the forefront of the Company’s focus on the execution and
enhancement of the Company’s compliance policies and procedures, and privacy and data governance initiatives. In 2022, the Compliance
Committee continued to focus on sustaining and enhancing the Company’s compliance programs in light of increasing regulatory requirements
around the globe, including sanctions applicable to Russia and Belarus.”
|
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Timothy
P. Murphy, Committee Chair |
|
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|
Additional Committee Members: Martin I.
Cole, Jan Siegmund, and Solomon D. Trujillo
Meetings Held in 2022: 4
Primary Responsibilities: Pursuant to
its charter, the Compliance Committee assists the Audit Committee and the Board in fulfilling the Board’s oversight responsibility
for the Company’s compliance with legal and regulatory requirements. Among other things, the Compliance Committee is responsible
for reviewing and discussing with management:
• the Company’s
compliance programs, policies and key risk exposures relating to AML, sanctions, anti-corruption, fraud prevention, consumer protection,
and privacy laws, including establishing procedures to be apprised of material investigations or other material matters that may arise
in relation to such laws; and
• legal, compliance
or other regulatory matters that may have a material effect on the Company’s business, financial statements or compliance policies,
including material notices to or inquiries received from governmental agencies.
Independence: Each voting member of the Compliance
Committee meets the independence requirements of our Corporate Governance Guidelines, the NYSE, and the Exchange Act, and as the Board
has determined, has no material relationship with the Company. The Board may appoint non-voting members to the Compliance Committee that
are not independent from the Company. |
2023
Proxy Statement | 21
CORPORATE
GOVERNANCE
Corporate Governance, ESG, and Public Policy Committee |
|
“In 2022, the Committee continued to focus on oversight of the Company’s ESG disclosures and strategy development. The Committee also assisted the Board in reviewing proposed SEC rules regarding insider trading, share repurchase disclosure modernization, cybersecurity risk management and disclosure, and climate change disclosure.”
Betsy
Holden, Committee Chair |
|
|
|
Additional Committee Members: Michael
A. Miles, Jr. and Joyce A. Phillips
Meetings Held in 2022: 4
Primary Responsibilities: Pursuant to
its charter, the Corporate Governance, ESG, and Public Policy Committee is responsible for:
• recommending
to the Board of Directors criteria for Board and committee membership;
• considering,
in consultation with the Chair of the Board and the CEO, and recruiting candidates to fill positions on the Board of Directors;
• evaluating
current directors for re-nomination to the Board of Directors;
• recommending
director nominees to the Board of Directors;
• recommending
to the Board of Directors appointments to committees of the Board of Directors;
• recommending
to the Board of Directors corporate governance guidelines, reviewing the Corporate Governance Guidelines at least annually, and recommending
modifications to the Corporate Governance Guidelines to the Board of Directors;
• advising
the Board of Directors with respect to the charters, structure, and operations of the various committees of the Board of Directors and
qualifications for membership thereon;
• overseeing
the development and implementation of an orientation and continuing education program for directors;
• establishing
and implementing self-evaluation procedures for the Board of Directors and its committees;
• reviewing
stockholder proposals submitted for inclusion in the Company’s Proxy Statement;
• reviewing
the Company’s related persons transaction policy, and as necessary, reviewing specific related person transactions; and
• reviewing
and advising the Board of Directors regarding public policy and ESG matters that are relevant to the Company or the industries in which
the Company operates.
Independence: Each member of the Corporate Governance,
ESG, and Public Policy Committee meets the independence requirements of our Corporate Governance Guidelines, the NYSE and the Exchange
Act, and as the Board has determined, has no material relationship with the Company. |
22 | The
Western Union Company
CORPORATE
GOVERNANCE
CHIEF EXECUTIVE OFFICER
SUCCESSION PLANNING
The Company’s Board of Directors has developed
a governance framework for CEO succession planning that is intended to provide for a talent-rich leadership organization that can drive
the Company’s strategic objectives. Under its governance framework, the Board of Directors:
- |
Reviews succession planning for the CEO on an annual basis. As part of this process, the CEO reviews the annual performance of each member of the management team with the Board and the Board engages in a discussion with |
|
the CEO and the Chief People Officer regarding each team member and the team member’s development; |
- |
Maintains a confidential plan to address any unexpected short-term absence of the CEO and identifies candidates who could act as interim CEO in the event of any such unexpected absence; and |
- |
Ideally three to five years before the retirement of the current CEO, manages the succession process and determines the current CEO’s role in that process. |
COMMUNICATIONS WITH
THE BOARD OF DIRECTORS
Any stockholder of the Company or other interested
party who desires to contact the non-management directors either as a group or individually, or Mr. McGranahan in his capacity as a director,
may do so by writing to: The Western Union Company, Board of Directors, 7001 E. Belleview Avenue, Denver, Colorado 80237. Communications
that are intended specifically for non-management directors
should be addressed to the attention of the Chair of the Corporate Governance,
ESG, and Public Policy Committee. All communications will be forwarded to the Chair of the Corporate Governance, ESG, and Public Policy
Committee unless the communication is specifically addressed to another member of the Board, in which case, the communication will be
forwarded to that director.
BOARD ATTENDANCE AT
ANNUAL MEETING OF STOCKHOLDERS
Although the Company does not have a formal policy
regarding attendance by members of the Board of Directors at the Company’s Annual Meeting of Stockholders, it
encourages directors
to attend. All members of the Board of Directors serving at the time attended the Company’s 2022 Annual Meeting of Stockholders.
PRESIDING DIRECTOR
OF NON-MANAGEMENT DIRECTOR MEETINGS
The non-management directors meet in regularly
scheduled executive sessions without management. The Chair of the Board of Directors is the presiding director at these meetings.
NOMINATION OF DIRECTORS
The Company’s Board of Directors is responsible
for nominating directors for election by the stockholders and filling any vacancies on the Board that may occur. The Corporate Governance,
ESG, and Public Policy Committee is responsible for identifying, screening, and recommending candidates to the Board for Board membership.
The Corporate Governance, ESG, and Public Policy Committee does not have any single method for identifying director candidates, but will
consider candidates suggested by a wide range of sources, including by any stockholder, director, or officer of the Company.
The Corporate Governance, ESG, and Public Policy
Committee will consider candidates for election to the Board suggested in writing by a stockholder and will make a recommendation to the
Board using the same criteria as it does in evaluating candidates submitted by members of the Board of Directors. Any such suggestions
should be submitted to the Corporate Secretary, The Western Union Company, 7001 E. Belleview Avenue, Denver, Colorado 80237. If the Company
receives such a suggestion, the Company may request additional information from the candidate to assist in its evaluation.
2023
Proxy Statement | 23
CORPORATE
GOVERNANCE
DIRECTOR QUALIFICATIONS, REQUIREMENTS, AND EVALUATIONS |
CRITERIA
General criteria for the nomination of director
candidates include experience, high ethical standards and integrity, skills, diversity, ability to make independent analytical inquiries,
understanding of the Company’s business environment, and willingness to devote adequate time to Board duties–all in the context
of an assessment of the perceived needs of the Board at that point in time. In exercising its director nomination responsibilities, the
Corporate Governance, ESG, and Public Policy Committee considers diversity in gender, ethnicity, geography, background, and cultural viewpoints
when considering director nominees, given the global nature of the Company’s business. However, the Board has not adopted a formal
policy governing director diversity.
RETIREMENT POLICY
Our Corporate Governance Guidelines also require
that a director retire effective at the next annual meeting of
stockholders following the time such director reaches the age of 74. The
Board may waive this requirement for one year if it determines it is in the best interests of our Company. Each director is expected to
ensure that other existing and planned future commitments do not materially interfere with the member’s service as a Board or Committee
member.
BOARD EVALUATIONS
Pursuant to our Corporate Governance Guidelines,
we evaluate the overall effectiveness of the Board annually. The Board together with the Corporate Governance, ESG, and Public Policy
Committee conducts annual self-evaluations of Board and committee performance, including an evaluation of the effectiveness of the nomination
process. In addition, the Board conducts annual evaluations of each individual independent director.
Stockholders may submit nominations for director
candidates by giving notice to the Corporate Secretary, The Western Union Company, 7001 E. Belleview Avenue, Denver, Colorado 80237. The
requirements for the submission of
such stockholder nominations are set forth in Article II of the Company’s By-Laws, which are
available on the “Investor Relations, Corporate Governance” section of the Company’s website, www.westernunion.com.
REPORT
OF THE AUDIT COMMITTEE
The Audit Committee is currently comprised
of five independent directors and operates under a written charter adopted by the Board. The Audit Committee reviews the charter at least
annually, reviewing it last in December 2022. The charter is available through the “Investor Relations, Corporate Governance”
portion of the Company’s website www.westernunion.com.
The Board has the ultimate authority for effective
corporate governance, including the role of oversight of the management of the Company. The Audit Committee’s purpose is to assist
the Board in fulfilling its oversight responsibilities with respect to the Company’s consolidated financial statements, independent
registered public accounting firm qualifications and independence, performance of the Company’s internal audit function and independent
registered public accounting firm, and other matters identified in the Audit Committee Charter. The Audit Committee relies on the expertise
and knowledge of management, the internal auditors and the independent registered public accounting firm in carrying out its responsibilities.
Management is responsible for the preparation, presentation, and integrity of the Company’s consolidated financial statements, accounting
and financial reporting principles, internal control over financial reporting and disclosure controls, and procedures designed to ensure
compliance with accounting standards, applicable laws, and regulations. In addition, management is responsible for objectively reviewing
and evaluating the adequacy, effectiveness, and quality of the Company’s system of internal control. The Company’s independent
registered public accounting firm, Ernst & Young LLP, is responsible for performing an independent audit of the consolidated financial
statements and for expressing an opinion on the conformity of those financial statements with United States generally accepted accounting
principles. The Company’s independent registered public accounting firm is also responsible for expressing an opinion on the effectiveness
of the Company’s internal control over financial reporting.
The Audit Committee engages in an annual evaluation
of the independent public accounting firm’s qualifications, assessing the firm’s quality of service, the firm’s sufficiency
of resources, the quality of the communication and interaction with the firm, and the firm’s independence, objectivity, and professional
skepticism. In evaluating and selecting the Company’s independent registered public accounting firm, the Audit Committee considers,
among other things, historical and recent performance of the firm, an analysis of known significant legal or regulatory proceedings related
to the firm, recent Public Company Accounting Oversight Board (the “PCAOB”) reports regarding the firm, industry experience,
audit fee revenues, audit approach, and the independence of the firm. The Audit Committee also periodically considers the advisability
and potential impact
of selecting a different independent public accounting firm. In addition, the Audit Committee is involved in the
lead audit partner selection process.
During fiscal year 2022, the Audit Committee
fulfilled its duties and responsibilities as outlined in its charter. Specifically, the Audit Committee, among other actions:
| - | reviewed and discussed with management and the independent registered public accounting firm the Company’s quarterly earnings
press releases, consolidated financial statements, and related periodic reports filed with the SEC; |
| - | reviewed with management, the independent registered public accounting firm and the internal auditor, management’s assessment
of the effectiveness of the Company’s internal control over financial reporting, and the effectiveness of the Company’s internal
control over financial reporting; |
| - | reviewed with the independent registered public accounting firm, management, and the internal auditor, as appropriate, the audit scope
and plans of both the independent registered public accounting firm and internal auditor; |
| - | reviewed with the independent registered public accounting firm the critical audit matters expected in their report for the 2022 audit; |
| - | met in periodic executive sessions with each of the independent registered public accounting firm, management, and the internal auditor; |
| - | received the written disclosures and the annual letter from Ernst & Young LLP provided to us pursuant to PCAOB Ethics and Independence
Rule 3526, Communication with Audit Committees Concerning Independence, concerning their independence and discussed with Ernst
& Young LLP their independence; and |
| - | reviewed and pre-approved all fees paid to Ernst & Young LLP, as described in Proposal 4–Ratification of Selection of Auditors,
and considered whether Ernst & Young LLP’s provision of non-audit services to the Company was compatible with the independence
of the independent registered public accounting firm. |
The Audit Committee has reviewed and discussed
with the Company’s management and independent registered public accounting firm the Company’s audited consolidated financial
statements and related footnotes for the fiscal year ended December 31, 2022, and the independent registered public accounting firm’s
report on those financial statements. Management represented to the Audit Committee that the Company’s financial statements were
prepared in accordance with United States generally accepted accounting principles.
28 | The
Western Union Company
REPORT
OF THE AUDIT COMMITTEE
We have discussed with Ernst & Young LLP
the matters required to be discussed with the Audit Committee by the applicable requirements of the PCAOB and the SEC. Such communications
include, among other items, matters relating to the conduct of an audit of the Company’s consolidated financial statements under
the standards of the PCAOB. This review included a discussion with management and the independent registered public accounting firm about
the quality (not merely the acceptability) of the Company’s accounting principles, the reasonableness of significant
estimates and
judgments, and the disclosures in the Company’s financial statements, including the disclosures relating to critical accounting
policies.
In reliance on the review and discussions described
above, we recommended to the Board of Directors, and the Board approved, that the audited consolidated financial statements and management’s
assessment of the effectiveness of internal control over financial reporting be included in the Company’s Annual Report on Form
10-K for the year ended December 31, 2022 for filing with the SEC.
Audit Committee
Jan Siegmund (Chair)
Richard A. Goodman
Timothy P. Murphy
Angela A. Sun
Solomon D. Trujillo
2023
Proxy Statement | 29
COMPENSATION
AND BENEFITS
COMMITTEE REPORT
The Compensation Committee has reviewed and discussed
the Company’s Compensation Discussion and Analysis with management and based on such review and discussion, the Compensation Committee
recommended to the Board of
Directors that the Compensation Discussion and Analysis be included in the Company’s Proxy Statement
and its Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Compensation and Benefits Committee*
Michael A. Miles, Jr. (Chair)
Martin I. Cole
Richard A. Goodman
Betsy D. Holden
Joyce Phillips
| * | Angela A. Sun joined the Compensation Committee after it recommended the Compensation Discussion and Analysis
to the Board. |
30 | The
Western Union Company
COMPENSATION
DISCUSSION AND ANALYSIS
EXECUTIVE SUMMARY
BUSINESS
OVERVIEW
The Western Union Company provides people and
businesses with fast, reliable, and convenient ways to send money and make payments around the world. Western Union offers its services
in more than 200 countries and territories. Our business is complex: our regulatory environment is disparate and developing; our consumers
are different from those addressed by traditional financial services firms; and our agent and client relationships are numerous and varied.
Managing these complexities is at the center of Western
Union’s success, and our leadership must be capable of supporting our Company’s
goals amid this complexity.
The Company’s key strategic pillars for
2022 are set forth in the chart below. The performance goals and objectives under our annual incentive and long-term incentive programs
were designed to support these strategic pillars and to support the Company during a time of leadership transition and strategic transformation.
Please see our 2022 Annual Report on Form
10-K for more information regarding our performance.
| (1) | See Annex A for a reconciliation
of measures that are not based on accounting principles generally accepted in the United States (“GAAP”) to the comparable
GAAP measure. |
2023
Proxy Statement | 31
COMPENSATION
DISCUSSION AND ANALYSIS
EXECUTIVE
COMPENSATION FRAMEWORK
The Company’s executive compensation framework
is designed to reinforce our executive compensation philosophy and objectives and includes the following:
✓ Pay-for-performance
and at-risk compensation.
A significant portion of our targeted
annual compensation is performance-based and/or subject to forfeiture (“at-risk”), with emphasis on variable pay to reward
short- and long-term performance measured against pre-established objectives informed by our Company’s strategy. For 2022, performance-based
compensation comprised approximately 76% of the targeted annual compensation for our CEO and, on average, approximately 57% of the targeted
annual compensation for our other NEOs, excluding Messrs. Cagwin and Adams due to their mid-year employment commencement. The remaining
components of such NEOs’ 2022 targeted annual compensation consisted of base salary and service-based RSUs, with the Compensation
Committee viewing RSUs as at-risk as their value fluctuates based on our stock price performance.
✓ Align
compensation with stockholder interests.
Performance measures for incentive compensation
are linked to the overall performance of the Company and are designed to be aligned with the creation of long-term stockholder value.
✓ Emphasis
on future pay opportunity vs. current pay.
Our long-term incentive awards are equity-based,
use performance and multi-year vesting provisions to encourage retention, and are designed to align our NEOs’ interests with long-term
stockholder interests. For 2022, long-term equity compensation comprised approximately 75% of the targeted annual compensation for our
CEO and, on average, approximately 63% of the targeted annual compensation for our other NEOs, excluding Messrs. Cagwin and Adams due
to their mid-year employment commencement.
✓ Mix
of performance metrics.
The Company utilizes a mix of performance
metrics that emphasize both absolute performance goals, which provide the primary links between incentive compensation and the Company’s
strategic operating plan and financial results, and a relative payout modifier, which measures Company performance in comparison to the
S&P 500 Index.
✓ Stockholder
engagement.
The Compensation Committee chair and members
of management engage with stockholders regularly to discuss and understand their perceptions or concerns regarding our executive compensation
program.
✓ “Clawback”
policy.
The Company may recover incentive compensation
paid to certain officers in the event of an accounting restatement or if such officers engaged in detrimental conduct, as defined in the
clawback policy. In addition, the Company may recover incentive compensation paid to certain officers for conduct that is determined to
have contributed to material compliance failures, subject to applicable laws.
✓ Robust
stock ownership guidelines.
We require our executive officers to own
a meaningful amount of Company stock to align them with long-term stockholder interests (6x base salary in the case of our CEO and 3x
base salary for our other continuing NEOs).
✓ Include
ESG metrics in compensation program.
Our annual incentive program incorporates
ESG metrics, which qualitatively assess progress towards the Company’s three pillars - Integrity of Global Money Movement, Economic
Prosperity, and Diversity, Equity and Inclusion. In addition, our annual incentive program incorporates compliance and leadership metrics.
✓ Multi-year
vesting and/or performance periods for long-term incentive awards.
✓ Independent
compensation consultant retained by the Compensation Committee.
✓ “Double
trigger” severance benefits in the event of a change-in-control.
✓ Maximum
payout caps for annual cash incentive compensation and PSUs. |
32 | The
Western Union Company
COMPENSATION
DISCUSSION AND ANALYSIS
WHAT WE DON’T DO |
✘ No
repricing or buyout of underwater stock options without stockholder approval.
✘ No
change-in-control tax gross-ups.
✘ Prohibition
against pledging and hedging of Company securities by senior executives and directors.
✘ No
dividends or dividend equivalents paid on unvested or unearned PSUs or RSUs.
✘ No
service-based defined benefit pension plan. |
CHIEF
EXECUTIVE OFFICER COMPENSATION
Devin McGranahan assumed the position of President
and Chief Executive Officer of the Company on December 27, 2021 and his 2022 compensation was set in 2021 after considering the input
of the committee’s independent compensation consultant, market data for the CEO role, the compensation received by Mr. McGranahan
at his prior employer, including the compensation that would be forfeited upon him joining the Company, and the compensation received
by the Company’s prior CEO. For 2022 performance, Mr. McGranahan received an annual incentive payout of $986,000 reflecting achieved
performance of 58% of target, as further described on pages 41-43.
In 2022, Mr. McGranahan’s long-term incentive
allocation was comprised of 60% PSUs, 20% stock options and 20% service-based RSUs. Further information with respect to the 2022 long-term
incentive awards can be found on pages 43-47.
Mr. McGranahan’s 2022 total target direct
compensation (which includes base salary, target bonus opportunity and the 2022 long-term incentive grant value) was weighted significantly
toward variable and performance-based incentive pay over fixed pay, and long-term, equity-based pay over annual cash compensation, because
the Compensation Committee desired to tie a significant level of the CEO’s compensation to the performance of the Company.
The percentage of compensation delivered in the
form of performance-based compensation in 2022 was higher for Mr. McGranahan as compared to our other NEOs because the
Compensation Committee believes that the CEO’s
leadership is one of the key drivers of the Company’s success and that a greater percentage of the CEO’s total compensation
should be variable as a reflection of the Company’s level of performance. Market data provided by the Compensation Committee’s
independent compensation consultant supported this practice as well.
The following chart illustrates our CEO pay philosophy
of heavily weighting targeted CEO compensation toward variable, performance-based pay elements.
CEO 2022 TOTAL TARGET DIRECT COMPENSATION
2022
SAY ON PAY VOTE
The Company received approximately 88% support
for its “say on pay” vote at the Company’s 2022 Annual Meeting of Stockholders and an average support level of 91% for
the Company’s “say on pay” votes over the last five years. After considering the 2022 “say on pay” results,
the Compensation Committee determined that the Company’s executive compensation philosophy, compensation objectives, and compensation
elements continued to be
appropriate and did not make any specific changes
to the Company’s executive compensation program in response to the 2022 “say on pay” vote. While the committee did not
make any changes to the 2022 program in response to the 2022 “say on pay vote,” as further described below, the committee
did refine the program to create the incentives deemed necessary during a time of leadership transition and strategic transformation.
2023
Proxy Statement | 33
COMPENSATION
DISCUSSION AND ANALYSIS
STOCKHOLDER
ENGAGEMENT
Management and the Compensation Committee Chair
regularly reach out to stockholders to better understand their views on the Company’s executive compensation program, the “say
on pay” vote and our executive compensation disclosure. In 2022, the Company reached out to stockholders who held approximately
69% of the Company’s outstanding common stock to discuss the Company’s
executive compensation program and held discussions
with all stockholders who accepted the Company’s invitation. Over the past few years, the Compensation Committee and management
have found these discussions to be very helpful in their ongoing evaluation of the Company’s executive compensation program, and
intend to continue to obtain this feedback in the future.
ESTABLISHING AND EVALUATING
EXECUTIVE COMPENSATION
INTRODUCTION
This Compensation Discussion and Analysis describes
how the Compensation Committee determined 2022 executive compensation, the elements of our executive compensation program and the compensation
of each of our NEOs.
The information provided should be read together
with the information presented in the “Executive Compensation” section of this Proxy Statement. For 2022, the NEOs were:(1)
| (1) | For 2022, the NEOs also included Raj Agrawal, former Chief Financial Officer (not pictured above). Mr.
Agrawal resigned from the Company, effective September 2, 2022. Mr. Agrawal did not receive any severance benefits upon his resignation
other than the retirement vesting treatment pursuant to the terms of his outstanding equity awards. |
| (2) | In July 2022, Matt Cagwin joined the Company as its Head of Business Unit Financial Planning and Analysis
and was promoted to interim Chief Financial Officer (“CFO”) after Mr. Agrawal’s resignation from the Company. Mr. Cagwin
did not participate in the Company’s 2022 annual compensation program for NEOs due to his role during 2022 as interim CFO and mid-year
employment commencement. Effective January 20, 2023, Mr. Cagwin was promoted to the position of CFO. Please see “Employment Arrangements”
later in this “Compensation Discussion and Analysis” for a discussion of Mr. Cagwin’s 2022 compensation arrangements
as well as the compensation awarded to him upon his January 2023 promotion to CFO. |
| (3) | On February 24, 2023, the Company determined that Gabriella Fitzgerald would cease serving as President, North America, effective as of
March 10, 2023. Upon her departure, Ms. Fitzgerald became eligible for benefits under the Company’s existing Severance/Change in
Control Policy (Executive Committee Level). |
| (4) | Benjamin Adams joined the Company as its Chief Legal Officer on June 1, 2022. He has also served as our
Interim Chief People Officer since February 2023. |
34 | The
Western Union Company
COMPENSATION
DISCUSSION AND ANALYSIS
OUR
EXECUTIVE COMPENSATION PHILOSOPHY AND OBJECTIVES
The Compensation Committee has adopted the following
compensation objectives and guiding principles to align the Company’s incentive compensation program with the Company’s overall
executive compensation philosophy:
|
|
|
|
|
Our Executive Compensation Philosophy
The Compensation Committee believes the Company’s
executive compensation program should reward actions and behaviors that build a foundation for the long-term strength and performance
of the Company, while also rewarding the achievement of short-term performance goals informed by the Company’s strategy. |
|
|
Objectives |
•
Align executive goals and compensation with stockholder interests
•
Attract, retain and motivate outstanding executive talent
•
Pay-for-performance – Hold executives accountable and
reward them for achieving financial, strategic and operating goals |
|
|
Guiding
Principles |
•
Pay-for-Performance: Pay
is significantly performance-based and at-risk, with emphasis on variable pay to reward short- and long-term performance measured against
pre-established objectives informed by the Company’s strategy.
•
Align Compensation with Stockholder Interests: Link
incentive payouts with the overall performance of the Company, including achievement of financial and strategic objectives, as well as
individual performance and contributions, to create long-term stockholder value.
•
Stock Ownership Guidelines: Our
program requires meaningful stock ownership by our executives to align them with long-term stockholder interests.
•
Emphasis on Future Pay Opportunity vs. Current Pay: Our
long-term incentive awards are delivered in the form of equity-based compensation with multi-year vesting provisions to encourage retention.
•
Hire, Retain and Motivate Top Talent: Offer
market-competitive compensation which clearly links payouts to actual performance, including rewarding appropriately for superior results,
facilitating the hire and retention of high-caliber individuals with the skills, experience and demonstrated performance required for
our Company.
•
Principled Programs: Structure
our compensation programs considering corporate governance best practices and in a manner that is understandable by our participants and
stockholders. |
|
|
|
|
|
THE
BOARD OF DIRECTORS AND THE COMPENSATION COMMITTEE
Our Board oversees the goals and objectives of
the Company and the CEO, evaluates succession planning with respect to the CEO and evaluates the CEO’s performance. The Compensation
Committee supports the Board by:
| • | Establishing the Company’s compensation philosophy; |
| • | Overseeing the development and implementation of the Company’s
compensation and benefits policies; |
| • | Reviewing and approving corporate goals and objectives relevant
to the compensation of the CEO and other executive officers; |
| • | Approving the compensation levels of each of the executive
officers; |
| • | Approving the compensation of the CEO, with ratification
by the independent directors of the Board; and |
| • | Overseeing critical role development and succession efforts
by providing strategic direction as the Board identifies key executive skills and experience priorities. |
The Compensation Committee’s responsibilities
under its charter are further described in the “Corporate Governance—Committees of the Board of Directors” section of
this Proxy Statement.
2023
Proxy Statement | 35
COMPENSATION
DISCUSSION AND ANALYSIS
Mr. McGranahan, while not a member of the Compensation
Committee, attended portions of each meeting of the Compensation Committee in 2022 to contribute to and understand the committee’s
oversight of, and decisions relating to, executive compensation. Mr. McGranahan did not attend portions of the meetings relating to his
compensation. The Compensation Committee regularly conducts executive sessions without management present.
The Compensation Committee also engages in an
ongoing dialog with the CEO and the committee’s independent compensation consultant in the evaluation and establishment of the elements
of our executive compensation program. Further, the Compensation Committee received input from employees in the Company’s human
resources department, including the Chief People Officer, in making executive compensation decisions.
COMPENSATION
CONSULTANTS
During 2022, Meridian continued to provide executive
and director compensation consulting services to the Compensation Committee.
Meridian is retained by and reports directly to the Compensation Committee and participates in committee meetings. Meridian informs the committee on market trends, as well as regulatory issues and developments and how they may impact the Company’s executive compensation program. Meridian also:
| • | Participates in the design of
the executive compensation program to help the committee evaluate the linkage between pay and performance; |
| • | Reviews market data and advises
the committee regarding the compensation of the Company’s executive officers; |
| • | Reviews and advises the committee
regarding outside director compensation; and |
| • | Performs an annual risk assessment
of the Company’s compensation program, as described in the “Executive Compensation—Risk Management and Compensation”
section of this Proxy Statement. |
Meridian does not provide any other services
to the Company. The Compensation Committee has assessed the independence of Meridian pursuant to the NYSE rules and the Company concluded
that the work performed by Meridian for the Compensation Committee did not raise any conflict of interest.
During 2022, management retained the services
of Willis Towers Watson PLC (“WTW”) to assist the Company in evaluating the Company’s annual and long-term incentive
programs. The Compensation Committee has assessed the independence of WTW pursuant to the NYSE rules and the Company concluded that WTW’s
work did not raise any conflict of interest.
SETTING
2022 COMPENSATION
In late 2021, the Compensation Committee, working
with Meridian and the CEO, engaged in a detailed review of the Company’s executive compensation program to evaluate whether the
design and levels of each compensation element were:
| • | Appropriate to support the Company’s
strategic performance objectives, strategic transformation and leadership transition; |
| • | Consistent with the philosophy
and objectives described under “—Our Executive Compensation Philosophy and Objectives” above; and |
| • | Reasonable when compared to market
pay practices (see “—Market Comparison” below). |
Consistent with the 2021 executive compensation
program, the Company’s 2022 executive compensation program continued to be significantly weighted towards performance-based compensation
and included a diversified mix of long-term
incentive awards. However, for 2022, the Compensation
Committee made certain modifications from the design of the 2021 executive compensation program to help create the incentives deemed necessary
during a time of leadership transition and strategic transformation. In particular, recognizing that the Company was at an important inflection
point with the CEO transition and the Company’s reset of its strategic operating plan, the Compensation Committee revisited the
executive compensation program goals and design to develop a program that would appropriately incentivize participants as the Company
continued to refine its strategic operating plan under its new leadership and retain participants over this period of transition. Accordingly,
with respect to the 2022 Annual Incentive Plan, the Compensation Committee modified the performance metrics as compared to prior years
by replacing the historical use of operating income with profit margin and earnings per share (“EPS”). In addition, the Compensation
Committee included performance goals relating to westernunion.com revenue growth and the Company’s execution of its long-term strategic
operating plan. With respect to the Long-Term Incentive Plan, the
36 | The
Western Union Company
COMPENSATION
DISCUSSION AND ANALYSIS
Compensation Committee approved the grant of
PSUs subject to vesting based solely on revenue growth (rather than the prior design of vesting based on revenue and operating margin),
with annual performance goals established at the beginning of each year during the performance period to reflect the difficulty of establishing
three-year performance goals during a time of strategic transformation at the Company. In addition, in order to simplify the program and
tie a greater percentage to the achievement of performance goals within the control of management, the Compensation Committee approved
the use of a TSR payout modifier rather than the stand-alone TSR PSUs that were granted in prior years. Under this design, the vesting
of the 2022 PSUs could be adjusted by +/-25% based upon the Company’s relative TSR ranking. In addition, to reflect market practices,
the Compensation Committee modified the vesting schedule for the service-based RSUs granted in 2022 as compared to prior years to provide
for one-third annual vesting as compared to cliff vesting on the third anniversary of the grant date. Each of these changes were designed
to support the Company during a time of leadership transition and strategic transformation, further align the Company’s executive
compensation program with market practices and help the Company retain and incentivize its key talent.
The Compensation Committee set the annual and
long-term incentive targets for the 2022 executive compensation program in February 2022. The Compensation Committee believed at the time
that the performance targets were rigorous yet achievable, and therefore established the targets so that they would be achieved, at the
target performance level, if the Company successfully executed against its operating plan for 2022 and the 2022-2024 performance period.
With respect to setting 2022 compensation levels,
Mr. McGranahan presented to the Compensation Committee his evaluation and recommendation for each of the other then-serving NEOs and their
respective salary, annual bonus targets, and long-term incentive award targets. Mr. McGranahan based his assessments on a number of factors,
including but not limited to: individual performance and relative contributions to the Company’s success; the performance of the
executive’s respective business unit or functional area; retention considerations; market data; compensation history; and internal
equity. After consideration and discussion, the Compensation Committee reviewed and approved Mr. McGranahan’s 2022 recommendations
for the then-serving NEOs other than himself.
In setting Mr. McGranahan’s 2022 compensation
at the time he agreed to join the Company in November 2021, the Compensation Committee considered the input of Meridian, market data for
the CEO role, the compensation received by Mr. McGranahan at his prior employer, including the compensation that would be forfeited upon
him joining the Company, and the compensation received by the Company’s prior CEO. No member of management made any recommendations
regarding Mr. McGranahan’s compensation or, except for the Company’s Chief People Officer, participated in the portions of
the Compensation Committee meeting or in the meeting of the independent directors of the Board during which Mr. McGranahan’s compensation
was determined or ratified.
MARKET
COMPARISON
For 2022, the Compensation Committee considered
market pay practices when setting executive compensation, but did not target percentile ranks of specific compensation elements or total
target direct compensation against the market data. Instead, the committee used market data to assess the overall competitiveness and
reasonableness of the Company’s executive compensation program.
While the Compensation Committee considers relevant
market pay practices when setting executive compensation, it does not believe it is appropriate to establish compensation levels based
only on market practices. The Compensation Committee believes that compensation decisions are complex and require a deliberate review
of Company and individual performance and peer compensation levels. The factors that influence the amount of compensation awarded include,
but are not limited to:
• |
Market competition for a particular position; |
|
|
• |
Experience and past performance inside or outside the Company; |
|
|
• |
Role and responsibilities within the Company; |
|
|
• |
Tenure with the Company and associated
institutional knowledge; |
|
|
• |
Long-term potential with the Company; |
|
|
• |
Innovative thinking and leadership; |
|
|
• |
Money transfer or financial services industry expertise; |
|
|
• |
Personal performance and contributions; |
|
|
• |
Succession planning; |
|
|
• |
Past and future performance objectives; and |
|
|
• |
Value of the position within the Company. |
2023
Proxy Statement | 37
COMPENSATION
DISCUSSION AND ANALYSIS
As further discussed below, the Compensation
Committee considered market data from both an executive compensation peer group and a general industry compensation survey, but did not
assign a specific weight to either data source.
The Compensation Committee believes that the
Company’s executive compensation peer group should reflect the markets in which the Company competes for business, executive talent
and capital. Accordingly, the Company’s peer group includes companies meeting either of the following criteria:
• |
Global brands providing virtual products or services; or |
|
|
• |
Companies involved with payment and/or processing services. |
In 2021, Meridian was asked to re-evaluate
the Company’s peer group. Based on this review, in December 2021, the Compensation Committee approved changes to the Company’s
peer group to further align the median revenues
of the peer group with the Company’s revenues.
As a result, the Compensation Committee approved the removal of Ameriprise Financial, Inc., Comerica Incorporated, Northern Trust Corporation,
Sabre Corporation, and State Street Corporation, and the addition of Bread Financial Holdings, Inc., Genpact Limited, Jack Henry &
Associates, Inc., Paychex, Inc., and SS&C Technologies Holdings, Inc. to the Company’s peer group.
The executive compensation peer group used for
evaluating 2022 compensation decisions consisted of the companies below. Meridian compiled compensation information from the peer group
based on the publicly filed documents of each member of the peer group. Based on the information below, the Company estimates that it
is between the 25th and 50th percentiles of the peer group in terms of revenues, above the 75th percentile of the peer group in terms
of percentage of total revenues outside of the US, and below the 25th percentile of the peer group in terms of market capitalization.
PEER GROUP |
|
FISCAL YEAR 2021
REVENUES*
(IN MILLIONS) |
|
INTERNATIONAL
BUSINESS (% OF TOTAL
REVENUES OUTSIDE OF THE US) |
|
MARKET CAP
(AS OF 12/31/2021)
(IN MILLIONS) |
Bread Financial Holdings, Inc. (formerly Alliance Data Systems Corporation) |
|
$2,728 |
|
** |
|
$3,314 |
Broadridge Financial Solutions, Inc. |
|
$4,994 |
|
12% |
|
$21,861 |
CME Group Inc. |
|
$4,679 |
|
** |
|
$82,108 |
Discover Financial Services |
|
$11,869 |
|
0% |
|
$33,868 |
eBay Inc. |
|
$10,420 |
|
52% |
|
$41,629 |
Euronet Worldwide, Inc. |
|
$2,995 |
|
73% |
|
$6,299 |
Fidelity National Information Services, Inc. |
|
$13,877 |
|
26% |
|
$66,465 |
Fiserv, Inc. |
|
$16,226 |
|
14% |
|
$68,525 |
FLEETCOR Technologies, Inc. |
|
$2,834 |
|
37% |
|
$18,175 |
Genpact Limited |
|
$4,022 |
|
75% |
|
$9,982 |
Global Payments Inc. |
|
$8,524 |
|
17% |
|
$39,223 |
Intercontinental Exchange, Inc. |
|
$7,146 |
|
32% |
|
$77,057 |
Jack Henry & Associates, Inc. |
|
$1,758 |
|
0% |
|
$12,364 |
MoneyGram International, Inc. |
|
$1,284 |
|
58% |
|
$723 |
Nasdaq, Inc. |
|
$5,886 |
|
18% |
|
$35,118 |
Paychex, Inc. |
|
$4,057 |
|
1% |
|
$49,249 |
PayPal Holdings, Inc. |
|
$25,371 |
|
46% |
|
$221,568 |
SS&C Technologies Holdings, Inc. |
|
$5,051 |
|
28% |
|
$20,845 |
25th Percentile |
|
$3,252 |
|
14% |
|
$13,817 |
50th Percentile |
|
$5,022 |
|
27% |
|
$34,493 |
75th Percentile |
|
$9,946 |
|
47% |
|
$62,161 |
| * | All data was compiled by Meridian
who obtained peer company financial market intelligence from S&P Capital IQ. |
| ** | Data not available for this metric. |
38 | The
Western Union Company
COMPENSATION
DISCUSSION AND ANALYSIS
The Compensation Committee also referenced general
industry compensation survey data in evaluating executive pay in order to consider a broader perspective on market practices. To assist
the committee in its review of the general industry compensation survey data, Meridian extracts compensation information from the surveys
with respect to companies with annual revenues generally ranging from $3 billion to $6 billion. For the 2022 compensation review, Meridian
compiled compensation data from general industry compensation surveys provided by WTW (which included data from companies with annual
revenues between $3 billion and $6 billion), and peer group data taken directly from peer group proxy statements or from the Equilar Top
25 database. Executive positions were matched to the peer
group proxy data and third-party survey data based on job title, functional matches, and pay rank.
Use of Tally Sheets
The Compensation Committee reviews tally sheets
that present historical and current compensation data, valuations of future equity vesting, value of option exercises in the past five
years, as well as analyses for hypothetical terminations and retirements to allow the Compensation Committee to consider the Company’s
obligations under such circumstances. The tally sheets provide additional context for the committee in determining and assessing NEO compensation.
THE WESTERN UNION 2022
EXECUTIVE COMPENSATION PROGRAM
Pay-For-Performance and At-Risk Compensation
The principal components of the Company’s
2022 annual executive compensation program were annual base salary, annual incentive awards, and long-term incentive awards in the form
of PSUs, stock options (for Mr. McGranahan) and RSUs. The Compensation Committee designed the 2022 executive compensation program so that
performance-based pay elements (Annual Incentive Plan awards, PSUs and, if applicable, stock options) would constitute a significant portion
of the executive compensation awarded, determined at target levels. The following charts illustrate the mix of the targeted annual compensation
for Mr. McGranahan and the
average targeted annual compensation for the
other NEOs, excluding Messrs. Cagwin and Adams due to their mid-year employment commencement, and the portion of that compensation that
is performance-based and/or at-risk.
For purposes of these charts, the percentage
of targeted annual compensation was determined based on the annual base salary and target incentive opportunities applicable to the continuing
NEOs as of December 31, 2022. Mr. Cagwin is excluded from the chart below in light of the interim nature of his role during 2022 and his
mid-year commencement of employment, and Mr. Adams is similarly excluded from the chart in light of his mid-year commencement of employment.
CEO 2022 TOTAL
TARGET DIRECT COMPENSATION |
|
NEO 2022 TOTAL
TARGET DIRECT COMPENSATION |
|
|
|
2023
Proxy Statement | 39
COMPENSATION
DISCUSSION AND ANALYSIS
ELEMENTS
OF 2022 EXECUTIVE COMPENSATION PROGRAM
The following table lists the material elements
of the Company’s 2022 executive compensation program for the Company’s NEOs. The Compensation Committee believes that the
design of the Company’s executive compensation program focuses on performance-based compensation elements, provides alignment with
the Company’s short- and long-term financial and strategic priorities at the time through the annual and long-term incentive programs,
and provides alignment with stockholder interests.
|
|
Fixed |
|
At-Risk
/
Performance-Based |
|
|
|
|
|
|
|
|
|
|
|
|
|
Base
Salary |
|
Annual
Incentive Awards |
|
PSUs |
|
Stock
Options (CEO only) |
|
RSUs |
|
|
|
|
|
|
|
|
|
|
|
Key Characteristics |
|
Fixed compensation component payable in cash. |
|
Variable compensation component payable in cash based on performance against annually established performance objectives. |
|
PSUs vest based on the Company’s achievement of financial performance
objectives, with a payout modifier based on the Company’s relative TSR performance.
The value of PSUs is also dependent on our stock price over the performance
period.
PSUs accrue dividend equivalents, with dividend equivalents paid only to
the extent the underlying shares vest. |
|
Non-qualified stock options granted with an exercise price equal to
fair market value on the date of grant that expire 10 years after grant and become exercisable in 25% annual increments over a four-year
vesting period based on continued service during the vesting period.
The value of stock options is dependent on our stock price over the option
term. |
|
RSUs vest in one-third annual increments based on continued service
during the vesting period.
The value of RSUs is dependent on our stock price over the vesting period.
RSUs accrue dividend equivalents, with dividend equivalents paid only to
the extent the underlying shares vest. |
Why We Pay This Element |
|
Establish a pay foundation at competitive levels to attract and retain talented executives. |
|
Motivate and reward executives for performance on key financial, strategic
and/or individual performance goals over the year.
Hold our executives accountable, with payouts based on actual performance
against pre-established and communicated performance goals. |
|
Align the interests of executives with those of our stockholders by
focusing the executives on the Company’s financial and TSR performance over a multi-year period.
Hold our executives accountable, with payouts varying from target based on
actual performance against pre-established and communicated performance goals. |
|
Align interests of the CEO with those of our stockholders by focusing on long-term stock price appreciation over the option term. |
|
Competitive with market practices in order to attract and retain top
executive talent.
Align the interests of executives with those of our stockholders by focusing
the executives on long-term objectives over a multi-year vesting period, with the value of the award fluctuating based on stock price
performance. |
How We Determine Amount* |
|
Experience, job scope, responsibilities, market data, internal equity, and individual performance. |
|
Internal pay equity, market practice, corporate and individual performance.
Cash payouts ranging from 0% to 175% of target based on the achievement of
financial and strategic goals, with an additional +/- 25% modifier for participants other than Mr. McGranahan based on performance with
respect to a metric supporting key ESG initiatives, compliance, leadership and a personalized objective for each NEO. |
|
Internal pay equity, market practice and individual performance.
PSUs are subject to vesting ranging from 0% to 200% of target based on revenue
growth during the 2022-2024 performance period, with an additional +/-25% modifier based on the Company’s TSR performance relative
to the S&P 500 Index over the 2022-2024 performance period. |
|
Internal pay equity, market practice and individual performance. |
|
Internal pay equity, market practice and individual performance. |
| * | See the “Setting 2022 Compensation” section for further information regarding the determination
of 2022 compensation levels. |
40 | The
Western Union Company
COMPENSATION
DISCUSSION AND ANALYSIS
Each of Western Union’s 2022 executive
compensation program elements is described in further detail below.
Base Salary
Our philosophy is that base salaries should
meet the objectives of attracting and retaining the executives needed to lead the business. Base salary is a fixed compensation component
payable in cash. None of our NEOs received a base salary increase during 2022. Base salaries for Messrs. McGranahan and Adams were established
at the time they agreed to join the Company (in November 2021 and May 2022, respectively) based on market data, considering the scope
of each such employee’s role and responsibilities within the organization.
The following table sets forth each NEO’s
2021 and 2022 base salary levels as of December 31 of each year (or, in the case of Mr. Agrawal, as of his last day of employment):
EXECUTIVE |
|
2021 BASE
SALARY ($000) |
|
2022 BASE
SALARY ($000) |
Devin McGranahan |
|
1,000.0 |
|
1,000.0 |
Gabriella Fitzgerald |
|
550.0 |
|
550.0 |
Jean Claude Farah |
|
500.0 |
|
500.0 |
Benjamin Adams |
|
N/A |
|
450.0 |
Raj Agrawal |
|
650.0 |
|
650.0 |
Annual Incentive Compensation
Our Annual Incentive Plan is designed to motivate
and reward our NEOs for achieving short-term performance objectives. We believe the program supports our “pay-for-performance”
culture.
Target payout opportunities under the Annual
Incentive Plan are expressed as a percentage of a participant’s annual base salary. None of our NEOs received an Annual Incentive
Plan target increase with respect to 2022.
Potential payouts ranged from 0% to 175% of
target based on the achievement of pre-established financial and strategic goals. To measure individual performance against key objectives
for the Company as well as the executive’s success in fulfilling the executive’s responsibilities, the total payout under
the Annual Incentive Plan for the participating NEOs other than Mr. McGranahan was subject to a +/- 25% modifier based on the Compensation
Committee’s assessment versus metrics relating to leadership, compliance and ESG as well as an individual performance goal tailored
to each participating NEO’s functional area. In addition to the ESG metrics, the Compensation Committee believes the compliance
and leadership metrics support key ESG initiatives for the Company. Payouts for the NEOs (other than Mr. McGranahan) were capped at 200%
of each individual’s target bonus opportunity, with Mr. McGranahan’s payout capped at 175% of his target bonus opportunity.
The Annual Incentive Plan was based on the
achievement of financial and strategic goals weighted at 70% and 30%, respectively. The weighting of the performance measures
reflects the desire of the Compensation Committee
to tie a significant portion of annual incentive compensation to performance measures that the committee believes are meaningful to and
readily accessible by our investors, while at the same time emphasizing strategic performance objectives focused on the Company’s
growth imperatives and execution of its long-term strategic plan and compliance objectives.
Financial Performance and Goal Setting.
Consistent with prior years, the Compensation Committee set the annual incentive targets for the 2022 Annual Incentive Plan in February
2022. In order to better align the incentives with the Company’s long-term strategy, for 2022, the Compensation Committee approved
certain modifications to the financial component
of the Annual Incentive Plan. In particular, the financial component of the 2022 Annual Incentive Plan measures performance based on adjusted
revenue, adjusted profit margin, and adjusted EPS targets, weighted 50%, 30% and 20%, respectively, as compared to the prior practice
of having two equally weighted goals relating to revenue and operating income. The change in performance metrics was made after considering
the Company’s strategic transformation and market data and, in particular, the prevalence of EPS goals in peer programs, and to
better incentivize the leveraging of both income statement and balance sheet objectives to drive growth opportunities. The Compensation
Committee believed at the time that the performance targets were rigorous yet achievable, and therefore established the targets so that
they would be achieved, at the target performance level, if the Company successfully executed against its operating plan for 2022.
2023
Proxy Statement | 41
COMPENSATION
DISCUSSION AND ANALYSIS
|
|
2022 TARGET* |
|
2022 ACTUAL RESULTS |
|
ACHIEVEMENT (%) |
Adjusted Total Revenue |
|
$4,730M - $4,758M |
|
$4,512M |
|
0% |
Adjusted Profit Margin |
|
21.3% - 21.5% |
|
22.0% |
|
125% |
Adjusted EPS |
|
$1.96 – $1.98 |
|
$1.92 |
|
85% |
Overall Achievement |
|
|
|
|
|
55% |
| * | 2022 target and actual results for total revenue exclude Argentina inflation and are shown on a constant
currency basis, calculated assuming no changes in the currency exchange rates from 2021 currency exchange rates. 2022 target and actual
results for profit margin and EPS exclude special items, such as acquisition and divestiture costs, Russia/Belarus exit costs, Business
Solutions exit costs, Business Solutions operating results (excluded on a pro forma basis from 2022 and 2021 results), the gain on the
sale of Business Solutions, the impact of Russia/Belarus operating results, severance and other expenses from our operating excellence
initiatives, and the reversal of significant uncertain tax positions. The performance curve provided payout opportunities for performance
ranging from $4,651M to $4,837M for revenue, 20.0% to 22.8% for profit margin, and $1.87 to $2.07 for EPS. |
When the financial and strategic performance
measures were established, the committee determined that the effect of currency fluctuations, acquisitions and divestitures, including
related costs, and the Business Solutions business in light of the pending agreement to sell the business, should be excluded from both
the establishment of goals as well as the determination of payout calculations, and the financial impact in the Russia/CIS region as a
result of the conflict in Ukraine should be excluded from the determination of payout calculations, to more closely align with the underlying
operating performance of the business.
As described above, the Compensation Committee
set the 2022 financial performance goals by establishing payout ranges based on the Company’s revenue, profit margin, and EPS. These
performance measures were used in order to tie annual incentive compensation to measures of the Company’s financial performance
that the committee deemed meaningful to and readily accessible by our investors as well as aligned with the Company’s strategy.
The Compensation Committee established the performance
goals and corresponding payout percentages based upon input from management regarding the Company’s expected performance in the
upcoming year and considering the continued uncertainty caused by the ongoing COVID-19 pandemic as well as the Company’s new long-term
strategy planning that was underway at the time the goals were established. The Compensation Committee designed the goals to encourage
strong, focused performance by our executives, with the intention of balancing profitable revenue growth with a focus on expense and capital
management. The 2022 performance goals provided a maximum initial payout level of 175% of target if adjusted revenue and EPS grew by 4.0%
and 5.1%, respectively, as compared to 2021 adjusted performance. In addition, the Company would need to achieve adjusted profit margin
1.4% above the midpoint of the target for 2022 for maximum payout on this metric.
Strategic Performance and Goal Setting. Participants
in the 2022 Annual Incentive Plan had 30% of their award opportunity tied to the achievement of pre-established performance objectives
based upon the Company’s strategic operating plan, with a focus on the Company’s growth imperatives (as measured by C2C westernunion.com
money transfer revenue), implementation
and execution of global compliance priorities,
and a qualitative assessment of the attainment of certain delivery milestones as part of the Company’s long-term strategic plan,
each weighted at 33.33% of overall strategic performance. Performance levels of the objectives were designed to be achievable, but required
the coordinated, cross-functional focus and effort of the executives. Based on the achievement of the strategic performance objectives,
the Compensation Committee certified a payout equal to 67% of each NEO’s target allocated to the strategic performance objectives.
Individual Performance Modifier and Goal Setting.
Other than for Mr. McGranahan, each participating NEO’s payout under the 2022 Annual Incentive Plan was subject to a +/- 25% modifier
based on the Compensation Committee’s assessment of individual and business unit performance. In making its assessment, the Compensation
Committee considered the recommendations of Mr. McGranahan based on his review of the performance of each participating NEO against the
objectives established by the committee at the beginning of the year with
respect to the individual performance modifier. For 2022, the application of the individual performance modifier was determined based
on performance with respect to leadership objectives, an individual compliance evaluation, an individualized key performance indicator
for each NEO, and an ESG metric, which qualitatively assesses progress towards the Company’s three pillars - Integrity of Global
Money Movement, Economic Prosperity, and Diversity, Equity and Inclusion.
The Compensation Committee believes that the
performance objectives established for the application of the individual performance modifier are indicators of our executives’
success in fulfilling their responsibilities to the Company, supporting the Company’s strategic operating plan and executing on
key Company initiatives. The committee believes that including an assessment of contributions towards compliance initiatives and the Company’s
progress towards the Company’s three pillars (Integrity of Global Money Movement, Economic Prosperity, and Diversity, Equity and
Inclusion) reinforces these objectives as priorities throughout the organization. The performance required to receive a positive adjustment
under the individual performance modifier was designed to be achievable, but required strong and consistent performance by the executive.
42 | The
Western Union Company
COMPENSATION
DISCUSSION AND ANALYSIS
Based on the Compensation
Committee’s assessment of individual and business unit performance, the committee did approve individual performance modifiers
for certain of the participating NEOs ranging from -10% to -5%.
Compliance Evaluation. The 2022 award
agreements under the Annual Incentive Plan are subject to the Company’s
clawback policy, which specifically authorizes
the clawback of annual incentive payments due to compliance failures. In early 2023, the Compensation Committee determined that each participating
NEO met the compliance-related evaluation criteria and therefore determined that each NEO remained eligible for a bonus with respect to
2022.
NEO Payouts Under the 2022 Annual Incentive
Plan. The following table sets forth each participating NEO’s 2022 target award opportunity expressed (i) as a percentage of
2022 base salary and (ii) in dollars and the annual incentive payouts received by each participating NEO. As a result of Mr. Agrawal’s
resignation, Mr. Agrawal was not eligible to receive any payment under the 2022 Annual Incentive Plan.
EXECUTIVE |
|
TARGET
BONUS
AS A %
OF BASE
SALARY |
|
TARGET
AWARD
OPPORTUNITY
($000) |
|
FINANCIAL
OBJECTIVES
PAYOUT
($000) |
|
STRATEGIC
OBJECTIVES
PAYOUT AT
67% OF TARGET
($000) |
|
FINAL
BONUS
($000) |
Devin McGranahan |
|
170% |
|
1,700.0 |
|
646.2 |
|
339.8 |
|
986.0 |
Gabriella Fitzgerald |
|
110% |
|
605.0 |
|
214.9 |
|
105.8 |
|
320.7 |
Jean Claude Farah |
|
110% |
|
550.0 |
|
181.6 |
|
82.4 |
|
264.0 |
Benjamin Adams |
|
90% |
|
405.0 |
|
153.9 |
|
81.0 |
|
234.9 |
Raj Agrawal |
|
100% |
|
650.0 |
|
N/A |
|
N/A |
|
N/A |
Long-Term Incentive Compensation
The objectives for the long-term incentive awards
for 2022 were to:
• |
Align the interests of our executives with the interests of our stockholders by focusing on objectives that support stock price appreciation; |
|
|
• |
Increase cross-functional executive focus in the coming years on Company performance through PSU awards with vesting tied to the achievement of absolute performance goals; |
|
|
• |
Continue executive focus on stockholder returns through the use of a relative TSR payout modifier; and |
|
|
• |
Retain the services of executives through multi-year vesting provisions. |
The Company’s stockholder-approved Long-Term
Incentive Plan allows the Compensation Committee to award various forms of long-term incentive grants, including stock options, RSUs,
and performance-based equity and cash awards. The Compensation Committee approves all equity grants made to our senior executives, with
the equity grants made to the CEO ratified by the independent members of the Board. When making regular annual equity grants, the Compensation
Committee’s practice is to approve them
during the first quarter of each year as part of the annual compensation review. In addition to the factors listed in the table under
“Elements of 2022 Executive Compensation Program,” the Compensation Committee also considers dilution of the Company’s
outstanding shares when making equity grants.
2022 Annual Long-Term Incentive Awards. In
early 2022, the Compensation Committee granted the then-serving NEOs long-term incentive awards under the Long-Term Incentive Plan. Excluding
Mr. McGranahan, none of our then-serving NEOs received a long-term incentive award target increase with respect to 2022. 2022 represented the first annual grant for
Mr. McGranahan, the value of which was determined at the time of his November 2021 offer of employment after considering the input of
the committee’s independent compensation consultant, market data for the CEO role, the compensation received by Mr. McGranahan at
his prior employer, and the compensation received by the Company’s prior CEO. Mr. Adams did not participate in the 2022 annual long-term
incentive award program due to his mid-year commencement of employment.
The following table sets forth the target award
value, as of the date of grant, of the 2022 long-term incentive awards received by each NEO:
2023
Proxy Statement | 43
COMPENSATION
DISCUSSION AND ANALYSIS
EXECUTIVE |
|
TARGET GRANT
VALUE ($000) |
Devin McGranahan |
|
8,000.0 |
Gabriella Fitzgerald |
|
1,900.0 |
Jean Claude Farah |
|
1,500.0 |
Raj Agrawal |
|
2,800.0 |
Once the target grant value was set for each
NEO, the grant value was then allocated among PSUs, RSUs and stock options, as applicable. In 2022, the Compensation Committee granted
the long-term incentive allocation indicated below to each of the then-serving NEOs as of the time of the February grants:*
CEO 2022 LONG-TERM INCENTIVE AWARDS
|
|
OTHER NEO 2022 LONG-TERM INCENTIVE AWARDS
|
| * | For purposes of the “Other NEO 2022 Long-Term Incentive Awards” chart, Messrs. Cagwin and
Adams are excluded from this chart as they were not employed by the Company as of the date of the February grants. |
The Compensation Committee believes that this
mix is appropriate because it is designed to align the interests of our NEOs with the interests of our stockholders, drive long-term performance
with respect to strategic measures, support retention of our NEOs and align with market practices as reported by Meridian. The committee
believes that this mix also represents a balanced reflection of stockholder returns and financial performance.
2022 PSU Awards. The 2022 PSUs will vest
based on performance against revenue growth goals, measured on a constant currency basis and excluding the impact of Argentina inflation,
with a +/- TSR payout modifier for TSR relative to the S&P 500 Index and subject to a maximum payout of 200% of target. For 2022,
the Compensation Committee approved a PSU design that will measure revenue performance annually during each year of the three-year performance
period, with each performance year equally weighted, the goals for each year established at the beginning of each of the three years in
the performance period and the payout based on an average of the performance during each year over the three-year performance period.
This represents a change from the 2021 PSU program, which included stand-alone TSR PSUs and Financial PSUs, with the Financial PSUs payout
to be determined based on performance goals for each year of the three-year performance period set at the beginning of the three-year
performance period. The committee approved these design changes in light of the
Company’s evolving strategic operating
plan at the time the goals were set and in order to provide for increased flexibility in light of the continued economic uncertainty caused
by the ongoing COVID-19 pandemic. In addition, the committee determined to replace the stand-alone TSR PSUs with a TSR modifier to simplify
the program design and create a greater linkage between the PSU program and performance within the control of management. While financial
performance will be measured on an annual basis, the TSR payout modifier will be determined based on a three-year performance period and
the PSUs will remain subject to a full three years of stock price fluctuations as the awards do not vest until the third anniversary of
the grant date (February 2025), except as otherwise provided under the Company’s Executive Severance Policy or the Long-Term Incentive
Plan and related award agreement.
For the first year of the three-year performance
period, the Compensation Committee required revenue ranging between $4,730M and $4,758M in order for the NEOs to earn a target payout
with respect to the portion of the PSUs allocated to the first year of the three-year performance period. Similar to the Annual Incentive
Plan design, to recognize the economic uncertainty caused by the pandemic, the committee approved a target payout range rather than having
one performance goal equating to target payout. The Company experienced revenue decline in 2022, resulting in 0% of the portion of the
2022 PSUs attributable to the first year of
44 | The
Western Union Company
COMPENSATION
DISCUSSION AND ANALYSIS
the three-year performance period eligible for
vesting. In addition, with respect to the TSR payout modifier, relative TSR results between the 25th and 75th percentiles of the S&P
500 Index will be interpolated linearly (i.e., +/- 1% change from the 50th percentile), such that relative TSR results for 50th percentile
performance will not result in the application of any TSR modifier (whereas relative TSR results for 60th percentile performance would
result in the application of a + 10% TSR payout modifier).
The Compensation Committee approved the use of
revenue growth in conjunction with the TSR modifier in order to place an emphasis on absolute Company performance while aligning to stockholder
interests. The Compensation Committee utilized revenue as an element in both the Company’s Annual Incentive Plan and long-term incentive
program. When designing the Company’s 2022 executive compensation program, the Compensation Committee evaluated a range of performance
metrics for purposes of the Company’s incentive programs and considered input from management and Meridian. Based on such review,
the Compensation Committee determined
that revenue continues to be viewed as a core
driver of the Company’s performance and stockholder value creation and should remain a component in both the Annual Incentive Plan
and long-term incentive program. In recognition of the Company’s use of revenue in both the annual and long-term incentive programs,
the Compensation Committee continued its historical practice of supplementing the primary performance measures under the Annual Incentive
Plan and long-term incentive program with additional performance measures in order to strike an appropriate balance with respect to incentivizing
top-line growth, profitability, non-financial business imperatives and stockholder returns over both the short-term and long-term horizons.
Similar to the Annual Incentive Plan, when the
financial performance objectives were established for the PSUs, the committee determined that the effect of currency fluctuations, acquisitions
and divestitures, the Business Solutions business, and the financial impact in the Russia/CIS region as a result of the conflict in Ukraine
should be excluded from the payout calculations.
The following table sets forth each participating
NEO’s threshold, target and maximum award opportunity with respect to the 2022 PSUs:
|
2022 PSUs WITH TSR MODIFIER
AWARD OPPORTUNITY |
EXECUTIVE |
THRESHOLD (#) |
|
TARGET (#) |
|
MAXIMUM (#) |
Devin McGranahan |
77,336 |
|
257,788 |
|
515,576 |
Gabriella Fitzgerald* |
17,666 |
|
58,885 |
|
117,770 |
Jean Claude Farah |
13,946 |
|
46,488 |
|
92,976 |
Raj Agrawal* |
26,033 |
|
86,777 |
|
173,554 |
| * | In connection with Ms. Fitzgerald’s and Mr. Agrawal’s separation from the Company, and
as a result of Mr. Agrawal satisfying the age and service requirements for retirement vesting treatment, or, in the case of Ms. Fitzgerald,
the Severance Policy, they will be eligible to receive prorated vesting of their 2022 PSU award based upon their period of service during
the vesting period and actual performance during the performance period (resulting in a threshold, target, and maximum award opportunity
of 6,126 units, 20,417 units, and 40,834 units for Ms. Fitzgerald and 4,537 units, 15,123 units, and 30,246 units, for Mr. Agrawal, respectively). |
Annual RSU Awards. Service-vesting RSUs
are granted to our NEOs to support retention and alignment of our NEOs’ interests with the interests of our stockholders. The 2022
annual RSU grants vest in one-third annual increments, subject to the NEO’s continued service or as otherwise
provided for under the Company’s
Executive Severance Policy or the Long-Term Incentive Plan and related award agreement. The Compensation Committee changed the
vesting schedule as compared to the prior three-year cliff vesting schedule to further align with market practices.
The following table sets forth each participating
NEO’s 2022 annual RSU grant:
EXECUTIVE |
|
ANNUAL RSU GRANT (#) |
Devin McGranahan |
|
85,930 |
Gabriella Fitzgerald* |
|
39,257 |
Jean Claude Farah |
|
30,992 |
Raj Agrawal* |
|
57,852 |
| * | In connection with Ms. Fitzgerald’s and Mr. Agrawal’s separation from the Company, and
as a result of Mr. Agrawal satisfying the age and service requirements for retirement vesting treatment, or in the case of Ms. Fitzgerald,
the Severance Policy, Ms. Fitzgerald and Mr. Agrawal received prorated vesting of their 2022 RSU award based upon their period of service
during the vesting period. |
2023
Proxy Statement | 45
COMPENSATION
DISCUSSION AND ANALYSIS
Stock Option Award. With respect to Mr.
McGranahan, stock options were granted to further emphasize the achievement of long-term objectives and encourage long-term value creation
as the stock options will have value to Mr. McGranahan only if the Company’s stock price appreciates from the date of grant. The
stock options have a 10-year term and vest in 25% annual increments over four years, subject to Mr. McGranahan’s continued service
or as otherwise provided for under the Company’s Executive Severance Policy or the Long-Term Incentive Plan and related award agreement.
For 2022, Mr. McGranahan received a stock option award representing the right to purchase 461,096 shares of the Company’s common
stock, subject to the satisfaction of the underlying service-based vesting conditions.
2020 PSU Awards. Under the terms of the
2020 PSUs, 2022 represented the final year of the three-year performance period for the 2020 Financial PSUs and the 2020 TSR PSUs. The
2020 Financial PSUs vested based on the extent to which the Company’s constant currency average growth rate for revenue and operating
margin (each weighted 50%) met certain goals over a cumulative three-year performance period. The 2020 TSR PSUs were scheduled to vest
based
on the Company’s achievement of relative
TSR performance versus the S&P 500 Index over a three-year performance period.
The 2020 Financial PSU and 2020 TSR PSU performance
objectives and the achievement levels are set forth in the tables below. While the performance periods for the 2020 PSUs concluded as
of December 31, 2022, these awards remained subject to service-based vesting conditions until the third anniversary of the grant date
(February 2023). Pursuant to the terms of the underlying award agreements and consistent with the adjustment methodology used in prior
years, the Compensation Committee excluded from the 2020 Financial PSU payout calculations costs incurred in connection with the Company’s
WU Way Next Generation Initiative in 2020 and expenses incurred in connection with the Company’s acquisition and divestiture activity
from 2020 through 2022. The 2020 revenue growth was adjusted to exclude Speedpay and Paymap due to the 2019 dispositions. Exclusions in
2022 also included Business Solutions exit costs, the impact of Business Solutions operating results, severance and other expenses from
our operating expense redeployment program, Russia/Belarus exit costs and the impact of Russia/Belarus operating results.
2020 FINANCIAL PSUs
(PERFORMANCE PERIOD 2020-2022) |
PERFORMANCE OBJECTIVES |
|
2020 FINANCIAL PSU PERFORMANCE GOALS |
|
ACTUAL PERFORMANCE* |
Targeted constant currency average growth rate for revenue, and operating margin, each measured over the
three-year performance period |
|
Revenue growth rate: 3.5%
Operating margin: 22.0% |
|
Revenue growth
rate = below threshold
Operating margin = 21.7% achievement |
Overall Attainment Level 34% |
| * | At constant currency, calculated assuming no changes in the currency exchange rates from the prior year’s
currency exchange rates. |
Based on performance over the three-year performance
period, as described above, the 2020 PSUs vested as follows for each of the participating NEOs:
2020 TSR PSUs
(PERFORMANCE PERIOD 2020-2022) |
|
|
PERFORMANCE GOALS |
|
|
PERFORMANCE OBJECTIVE |
|
THRESHOLD |
|
TARGET |
|
MAXIMUM |
|
ACTUAL PERFORMANCE |
TSR relative to S&P 500 Index* |
|
30th percentile |
|
60th percentile |
|
90th percentile |
|
4th percentile |
Overall Attainment Level 0% |
| * | Relative TSR performance for purposes of the 2020 TSR PSUs was calculated based on the terms of the
2020 TSR PSU award agreement, which requires using a beginning stock price calculated as the average company closing stock price for
all trading days during December 2019 and an ending stock price calculated as the average company closing stock price for all
trading days during December 2022. In determining the TSR for the companies in the S&P 500 Index, the S&P companies
comprising the S&P 500 Index on December 31, 2022 were used. |
46 | The
Western Union Company
COMPENSATION
DISCUSSION AND ANALYSIS
Based on performance over the three-year performance
period, as described above, the 2020 PSUs vested as follows for each of the participating NEOs:
EXECUTIVE* |
|
2020 TARGET
FINANCIAL
PSUs
(#) |
|
2020 EARNED
FINANCIAL
PSUs
(#) |
|
2020 TARGET
TSR PSUs
(#) |
|
2020 EARNED
TSR PSUs
(#) |
Raj Agrawal |
|
45,767 |
|
13,148 |
|
21,958 |
|
— |
Jean Claude Farah |
|
20,023 |
|
6,808 |
|
9,607 |
|
— |
| * | Mr. McGranahan and Ms. Fitzgerald commenced
employment with the Company following the commencement of the performance period and, accordingly,
did not receive 2020 PSUs. In connection with his departure and as a result of satisfying
the age and service requirements for retirement vesting treatment, Mr. Agrawal received prorated
vesting of his 2020 PSU award based upon his period of service during the vesting period
and actual performance during the performance period. |
2021 PSU Awards. Under the terms of the
2021 PSUs, 2022 represented the second year of the three-year performance period for the 2021 Financial PSUs and the 2021 TSR PSUs. The
2021 Financial PSU awards will vest based on performance metrics relating to a targeted constant currency growth rate for revenue, excluding
the impact of Argentina inflation, and operating margin (each weighted 50%), measured annually during each year of the three-year performance
period, with each performance year equally weighted. Based on 2022
performance, the Company experienced a decline
of 2.9% for total revenue and operating margin of 22.0%, resulting in 34% of the portion of the 2021 Financial PSUs attributable to the
second year of the three-year performance period eligible for vesting based on the NEO’s continued service through February 2024.
The 2021 TSR PSUs will have performance and payouts determined based on performance over the three-year cumulative performance period
ending December 31, 2023.
Other Elements of Compensation
To remain competitive with other employers and
to attract, retain, and motivate highly talented executives and other employees, we provide the benefits listed in the following table
to our U.S.-based employees:
BENEFIT OR PERQUISITE |
|
NAMED EXECUTIVE OFFICERS |
|
OTHER OFFICERS AND KEY EMPLOYEES |
|
ALL FULL-TIME AND REGULAR PART-TIME EMPLOYEES |
401(k) Plan |
|
✔ |
|
✔ |
|
✔ |
Supplemental
Incentive Savings Plan (a nonqualified defined
contribution plan) |
|
✔ |
|
✔ |
|
|
Severance and
Change-in-Control Benefits (Double-Trigger) |
|
✔ |
|
✔ |
|
✔ |
Health and Welfare
Benefits |
|
✔ |
|
✔ |
|
✔ |
Limited Perquisites |
|
✔ |
|
✔ |
|
|
Severance and Change-in-Control Benefits.
The Company has an Executive Severance Policy for our executive officers. Due to his interim role as CFO during 2022, Mr. Cagwin participated
in the Company’s Severance Policy for Tier I Employees. Upon promotion to CFO in January 2023, Mr. Cagwin became a participant
in the Executive Severance Policy.
These severance policies help accomplish the
Company’s compensation philosophy of attracting and retaining exemplary talent. The Compensation Committee believes it is appropriate
to provide executives with the rewards and protections afforded by these severance policies. These policies reduce the need to negotiate individual severance arrangements
with departing executives and protect our executives from termination for circumstances not of their doing. The committee also believes these policies
promote
management independence and help retain, stabilize, and focus the executive officers in the event of a change-in-control. In the
event of a change-in-control, the Executive Severance Policy’s severance benefits are payable only upon a “double trigger.”
This means that severance benefits are triggered only when an eligible executive is involuntarily terminated (other than for cause, death,
or disability), or terminates his or her own employment voluntarily for “good reason” (including a material reduction in title
or position, reduction in base salary or bonus opportunity or an increase in the executive’s commute to his or her current principal
working location of more than 50 miles without consent) within 24 months after the date of a change-in-control. The Company’s Severance
Policy for Tier I Employees does not provide for enhanced severance in connection with a change-in-control. Severance benefits under these policies are conditioned
upon the executive
2023
Proxy Statement | 47
COMPENSATION
DISCUSSION AND ANALYSIS
executing an agreement and release that includes, among other things, non-solicitation and, in the case of the Executive
Severance Policy, non-competition restrictive covenants and a release of claims against the Company. In connection with her departure in March 2023, Ms. Fitzgerald became eligible for severance benefits under the Executive Severance Policy.
The Executive Severance Policy was
amended in February 2023, effective May 1, 2023, to eliminate the legacy tax gross-up provision with respect to change-in-control benefits,
a provision which no longer had any operative effective. Accordingly, no executive officer of the Company is eligible for excise tax gross-up
payments under the Executive Severance Policy or otherwise.
As noted below, Mr. Farah is subject to an employment
agreement, which is a customary practice for executives located in the United Arab Emirates (“UAE”). Under the terms of Mr.
Farah’s employment agreement, he is required to receive three months’ notice of termination of employment or, in lieu of such
notice, three months of pay. In addition, Mr. Farah is also eligible for statutory end of service gratuity/severance amounts in accordance
with local law. Any amounts due to Mr. Farah under the Executive Severance Policy will be reduced by any end of service gratuity/severance
paid under the terms of his employment agreement or as required by local law.
Please see the “Executive Compensation—Potential
Payments Upon Termination or Change-in-Control” section of this Proxy Statement for further information regarding the Executive
Severance Policy, including the treatment of awards upon qualifying termination events or a change-in-control.
Employment Arrangements. The Company generally
executes an offer of employment before an executive joins the Company. This offer describes the basic terms of the executive’s employment,
including his or her start date, starting salary, annual incentive target and long-term incentive award target. The terms of the executive’s
employment are based thereafter on sustained good performance rather than contractual terms, and the Company’s policies, such as
the Executive Severance Policy, will apply as warranted.
In 2022, the Company and Mr. Cagwin entered into
an offer of employment outlining the basic terms of Mr. Cagwin’s employment as Head of Business Unit Financial Planning and Analysis.
In addition to setting forth Mr. Cagwin’s start date, starting salary of $425,000, annual incentive target of $212,500, and 2023
long-term incentive award target of $425,000, Mr. Cagwin’s offer of employment also included sign-on equity awards with a target
grant date fair value of $1,250,000. The sign-on equity award was delivered 80% as time-based RSUs, vesting in one-third annual installments
on the first three anniversaries of the grant date, and 20% as PSUs with the same performance metrics applicable to the 2022 PSUs delivered
to the other NEOs. Mr. Cagwin’s 2022 annual incentive award was subject to the same financial performance metrics applicable to
the other NEOs, as described above, but was not subject to the strategic goals.
In addition, Mr. Cagwin’s payout under the Annual
Incentive Plan was subject to an individual performance
modifier based on the CEO’s recommendation and tied to overall performance for the year as compared to established stretch individual
goals. Mr. Cagwin’s new hire equity award was in lieu of a 2022 annual equity grant from the Company and determined based on competitive
market data. During 2022, Mr. Cagwin was a participant in the Company’s Severance Policy for Tier I Employees. Mr. Cagwin’s
offer of employment provided for certain relocation benefits in connection with his relocation to Denver, Colorado, provided that a pro-rated
portion of expenses incurred by the Company as a result of such relocation must be repaid in the event that Mr. Cagwin terminates his
employment voluntarily or is terminated by the Company for cause within 24 months following his relocation.
In connection with his September 2022 promotion
to interim CFO, Mr. Cagwin was awarded a monthly stipend of $10,000 for each month of service as interim CFO. As noted above, in January
2023, Mr. Cagwin was promoted to the position of CFO. In connection with such promotion, the Compensation Committee approved an annual
base salary of $525,000, a target bonus under the Annual Incentive Plan of 100% of base salary and equity awards with a target grant date
fair value of $2,150,000 to be delivered in the same mix as the equity vehicles delivered to the Company’s other NEOs.
In 2022, the Company entered into an offer of
employment with Mr. Adams outlining the basic terms of Mr. Adams’ employment as Chief Legal Officer. In addition to setting forth
Mr. Adams’ start date, starting salary of $450,000, annual incentive target of $405,000,
and 2023 long-term incentive award target of $1,060,000, Mr. Adams’ offer of employment also included a sign-on equity award with
a target grant date fair value of $1,500,000. The sign-on equity award was delivered in the form of time-based RSUs, vesting in one-third
annual installments on the first three anniversaries of the grant date. Mr. Adams’ offer of employment also provides for certain
relocation benefits in connection with his relocation to Denver, Colorado, provided that a pro-rated portion of expenses incurred by the
Company as a result of such relocation must be repaid in the event that Mr. Adams terminates his employment voluntarily or is terminated
by the Company for cause within 24 months following his relocation. In addition, the offer letter provides that Mr. Adams will be eligible
for commuting expenses for travel to the Company’s headquarters prior to his relocation.
Under certain circumstances, the Compensation
Committee recognizes that special arrangements with respect to an executive’s employment may be necessary or desirable. For example,
Mr. Farah and a subsidiary of the Company entered into an employment contract in June 2008 with respect to Mr. Farah’s employment
with the Company. Employment contracts are a competitive market practice in the UAE where Mr. Farah resides, and the Compensation Committee
believes the terms of his contract are consistent with those for similarly situated executives in the UAE. Please see the “Executive
Compensation—Narrative to Summary
48 | The
Western Union Company
COMPENSATION
DISCUSSION AND ANALYSIS
Compensation Table and Grants of Plan-Based Awards
Table—Employment Arrangements” section of this Proxy Statement for a description of the material terms of the employment agreement
with Mr. Farah.
Retirement Savings Plans. The Company
executives on U.S. payroll are eligible for retirement benefits through a qualified defined contribution 401(k) plan, the Incentive Savings
Plan, and a nonqualified defined contribution plan, the Supplemental Incentive Savings Plan (“SISP”). The SISP provides a
vehicle for additional deferred compensation with contributions from the Company. We maintain the Incentive Savings Plan and the SISP
to encourage our employees to save some percentage of their cash compensation for their eventual retirement. The committee believes that
these types of savings plans are consistent with competitive pay practices, and are an important element in attracting and retaining talent
in a competitive market. Please see the 2022 Nonqualified Deferred Compensation Table in the “Executive Compensation” section
of this Proxy Statement for further information regarding the Company’s retirement savings plans.
Retention Arrangement. In 2022, the Compensation
Committee granted Mr. Agrawal a cash retention award of $700,000, payable on the 12-month anniversary of the grant date. This retention
award was provided to incentivize Mr. Agrawal to remain with the Company, particularly during a period of leadership transition. Mr. Agrawal
forfeited this award upon his resignation from the Company in September 2022.
Benefits and Perquisites. The Company’s
global benefit philosophy for employees, including executives, is to provide a package of benefits consistent with local practices and
competitive within individual markets. While employed with the Company, each of our NEOs participates in the health and welfare benefit
plans and fringe benefit programs generally available to all other Company employees in the individual market in which they are located.
For example, Mr. Farah resides in the UAE where it is customary to provide certain fringe benefits, including annual housing, education,
transportation, health and wellness and technology allowances.
The Company provided its NEOs with limited,
yet competitive perquisites and other personal benefits that the Compensation Committee believes are consistent
with the Company’s
philosophy of attracting and retaining exemplary executive talent and, in some cases, such as the annual physical examination, the Company
provides such personal benefits because the committee believes they are in the interests of the Company and its stockholders. The committee
periodically reviews the levels of perquisites and other personal benefits provided to NEOs.
Occasionally, Mr. McGranahan’s spouse or
other guests accompanied him on corporate aircraft when the aircraft was already scheduled for business purposes and could accommodate
additional passengers. In certain of those cases, there was no additional aggregate incremental cost to the Company and, as a result,
no amount is reflected with respect to those cases in the “2022 All Other Compensation Table.” Also, in connection with the
Company’s sponsorship of certain events and partnerships with various organizations and venues, certain perquisites, including tickets
and parking access, are made available to officers and employees of the Company, including Mr. McGranahan and the other NEOs. These perquisites
have no additional aggregate incremental cost to the Company, and therefore, no amount is reflected in the “2022 All Other Compensation
Table.”
Stock Ownership Guidelines
To align our executives’ interests with
those of our stockholders and to assure that our executives own meaningful levels of Company stock throughout their tenures with the Company,
the Compensation Committee established stock ownership guidelines that require each of the continuing NEOs to own shares of the Company’s
common stock worth a specified multiple of base salary. Under the stock ownership guidelines, the executives must retain, until the required
ownership guideline levels have been achieved and thereafter if required to maintain the required ownership levels, at least 50% of after-tax
shares resulting from the vesting of RSUs, including PSUs. The chart below shows the salary multiple guidelines and the equity holdings
that count towards the requirement as of the Record Date. Each continuing NEO subject to the guidelines has met, or is progressing towards
meeting, his or her respective ownership guideline.
EXECUTIVE |
|
GUIDELINE |
|
STATUS |
Devin McGranahan |
|
6x salary |
|
Must hold 50% of after-tax shares until guideline is met |
Matt Cagwin |
|
3x salary |
|
Must hold 50% of after-tax shares until guideline is met |
Jean Claude Farah |
|
3x salary |
|
Meets guideline |
Benjamin Adams |
|
3x salary |
|
Must hold 50% of after-tax shares until guideline is met |
WHAT
COUNTS TOWARD
THE GUIDELINE |
|
WHAT DOES NOT COUNT
TOWARD THE GUIDELINE |
✔ Company
securities owned personally |
|
✘ Stock options |
✔ Shares
held in any Company benefit plan |
|
✘ PSUs |
✔ After-tax
value of service-based restricted stock awards and RSUs |
|
|
2023
Proxy Statement | 49
COMPENSATION
DISCUSSION AND ANALYSIS
Prohibition Against Pledging and Hedging of the Company’s
Securities
The Company’s insider trading policies
prohibit the Company’s executive officers and directors from pledging the Company’s securities, and prohibit all Company employees,
including executive officers, and directors from engaging in hedging or short-term speculative trading of the Company’s securities,
including, without limitation, short sales or put or call options involving the Company’s securities.
Clawback Policy
The Company maintains a clawback policy under
which the Company may, in the Compensation Committee’s discretion and subject to applicable law, “clawback” incentive
compensation paid to certain officers of the Company (generally defined as an individual subject to Section 16 of the Exchange Act as
well as the Company’s CCO) in the event of an accounting restatement or if such officer engaged in detrimental conduct, as defined
in the clawback policy.
In addition, the Company is permitted under the
clawback policy, in the Compensation Committee’s discretion and subject to applicable laws, to clawback incentive compensation paid
to such officers for conduct that is determined to have directly contributed to material compliance failures resulting in a failure to
comply with applicable laws or regulations. Under this policy, if the Compensation Committee determines that incentive compensation is
subject to clawback, the Company, subject to the direction of the committee, has broad discretion to effect recovery of such amounts,
including requiring a cash payment, canceling outstanding or deferred awards, reducing future compensation, seeking recovery of any gain
or profit realized by the officer on the sale or other disposition of any equity-based awards, or other appropriate means. The Company
continues to monitor this policy to ensure that it is consistent with applicable laws and will review and modify the policy as necessary
to reflect the final NYSE listing rules adopted to implement the compensation recovery requirements under the Dodd-Frank Wall Street Reform
and Consumer Protection Act (the “Dodd-Frank Act”).
50 | The
Western Union Company
EXECUTIVE
COMPENSATION
The following table contains compensation information
for our NEOs for the year ended December 31, 2022 and, to the extent required under the SEC executive compensation disclosure rules, the
years ended December 31, 2021 and December 31, 2020.
2022 SUMMARY COMPENSATION
TABLE
NAME
AND
PRINCIPAL
POSITION |
|
YEAR |
|
SALARY
($000)(1) |
|
BONUS
($000)(2) |
|
STOCK
AWARDS
($000)(3) |
|
OPTION
AWARDS
($000)(3) |
|
NON-EQUITY
INCENTIVE
PLAN
COMPENSATION
($000)(4) |
|
CHANGE
IN
PENSION VALUE
AND
NON-QUALIFIED
DEFERRED
COMPENSATION
EARNINGS
($000) |
|
ALL
OTHER
COMPENSATION
($000)(5) |
|
TOTAL
($000) |
Devin
McGranahan
President and Chief Executive Officer |
|
2022 |
|
1,000.0 |
|
— |
|
3,407.1 |
|
1,600.0 |
|
986.0 |
|
— |
|
248.6 |
|
7,241.7 |
|
2021 |
|
17.4 |
|
1,000.0 |
|
6,500.0 |
|
6,600.0 |
|
— |
|
— |
|
— |
|
14,117.4 |
|
2020 |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
Matt
Cagwin
Chief Financial
Officer |
|
2022 |
|
234.5 |
|
— |
|
1,091.5 |
|
— |
|
56.4 |
|
— |
|
118.8 |
|
1,501.2 |
|
2021 |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
2020 |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
Gabriella
Fitzgerald
Former President, North America |
|
2022 |
|
550.0 |
|
100.0 |
|
1,193.8 |
|
— |
|
320.7 |
|
— |
|
36.2 |
|
2,200.7 |
|
2021 |
|
166.7 |
|
100.0 |
|
2,000.0 |
|
— |
|
471.9 |
|
— |
|
11.7 |
|
2,750.3 |
|
2020 |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
Jean
Claude Farah(6)
President, Middle East and Asia Pacific |
|
2022 |
|
500.0 |
|
— |
|
942.5 |
|
— |
|
264.0 |
|
— |
|
176.0 |
|
1,882.5 |
|
2021 |
|
500.0 |
|
— |
|
1,500.0 |
|
— |
|
429.0 |
|
— |
|
175.7 |
|
2,604.7 |
|
2020 |
|
500.0 |
|
— |
|
1,050.0 |
|
— |
|
324.5 |
|
— |
|
174.4 |
|
2,048.9 |
Benjamin
Adams
Chief Legal Officer and Interim Chief People Officer |
|
2022 |
|
262.5 |
|
— |
|
1,500.0 |
|
— |
|
234.9 |
|
— |
|
61.0 |
|
2,058.4 |
|
2021 |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
2020 |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
Raj
Agrawal
Former Chief Financial Officer |
|
2022 |
|
438.3 |
|
— |
|
1,759.3 |
|
— |
|
— |
|
— |
|
39.2 |
|
2,236.8 |
|
2021 |
|
650.0 |
|
— |
|
2,800.0 |
|
— |
|
507.0 |
|
— |
|
48.2 |
|
4,005.2 |
|
2020 |
|
646.7 |
|
— |
|
2,400.0 |
|
— |
|
377.0 |
|
— |
|
86.7 |
|
3,510.4 |
Footnotes:
(1) | Except with respect to salary adjustments in connection with promotions, any salary adjustments are effective
as of March of each reporting year. With respect to Mr. Cagwin, this amount also includes the monthly stipend of $10,000 for each month
of service as interim CFO. In the case of Messrs. Cagwin, Adams and Agrawal, 2022 salary amounts are pro-rated to reflect their period
of service with the Company during 2022. |
(2) | The amount reported in this column for Mr. McGranahan for 2021 represents a cash sign-on bonus in the
amount of $1,000,000, which was paid within 30 days of Mr. McGranahan’s employment start date. This cash sign-on bonus was subject
to pro-rata repayment in the event Mr. McGranahan voluntarily resigned from the Company (other than due to good reason) or was terminated
for cause prior to the one-year anniversary of his start date. The amounts reported in this column for Ms. Fitzgerald for 2021 and 2022
represent the first and second installments of a cash sign-on award in the amount of $200,000, the first installment of which was paid
within 30 days of Ms. Fitzgerald’s employment start date and the second installment of which was paid on the six-month anniversary
of Ms. Fitzgerald’s employment start date. This cash sign-on bonus was subject to pro-rata repayment in the event Ms. Fitzgerald
voluntarily resigned from the Company or was terminated for cause prior to the one-year anniversary of her start date. |
(3) | The amounts reported in these columns for 2022 represent equity grants to the NEOs under the Long-Term
Incentive Plan. The amounts reported in these columns are valued based on the aggregate grant date fair value computed in accordance with
FASB ASC Topic 718. The amounts included in the Stock Awards column for the PSUs granted during 2022 are calculated based on the probable
satisfaction of the performance conditions for such awards as of the date of grant. As disclosed in the “Compensation Discussion
and Analysis,” for the 2022 PSUs, the Compensation Committee established the revenue performance goal for the first year of the
three-year performance period with the annual goals for the subsequent years in the three-year performance period to be set at the beginning
of each applicable year during the |
2023
Proxy Statement | 51
EXECUTIVE
COMPENSATION
performance period. In accordance with
FASB ASC Topic 718, the value of the 2022 PSUs is based on one-third of the full number of shares subject to the 2022 PSUs for which the
target revenue growth goal was established in 2022. The remaining portion of the 2022 PSUs that will be linked to goals for subsequent
years will be reported in the Summary Compensation Table for those years in which the goals are established. Assuming the highest level
of performance is achieved for the 2022 PSUs, the maximum value for the one-third portion of the 2022 PSUs granted in 2022 under FASB
ASC Topic 718 would be as follows ($000): Mr. McGranahan -$3,614.2; Mr. Cagwin -$183.0; Ms. Fitzgerald - $867.6; Mr. Farah - $684.9; and
Mr. Agrawal - $1,278.5. Dividend equivalents with respect to the 2022 PSUs and 2022 RSUs will be paid to the extent the underlying PSUs
and RSUs are earned. See Note 17 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the years ended
December 31, 2022, 2021 and 2020, respectively, for a discussion on the relevant assumptions used in calculating the amounts reported
for the applicable year.
(4) | For 2022, the amounts reflect the actual cash bonus received under the Annual Incentive Plan. |
(5) | Amounts included in this column for 2022 are set forth by category in the 2022 All Other Compensation
Table below. |
(6) | For 2022, Mr. Farah’s salary was denominated in U.S. dollars but was paid to or on behalf of Mr.
Farah in Emirati dirham, based on a conversion rate of 0.272261. Contributions made to the Caisse des Français de l’Etranger
(the “CFE Retirement Fund”) on behalf of Mr. Farah were denominated in euros and converted to U.S. dollars for disclosure
in this Proxy Statement. The conversion rates of 1.131254047, 1.089778218, 1.055097529, and 1.055097529 were applied for quarters one,
two, three, and four, respectively. |
2022 ALL OTHER COMPENSATION
TABLE
NAME |
|
PERQUISITES
& OTHER
PERSONAL
BENEFITS
($000)(1) |
|
TAX
REIMBURSEMENTS
($000)(2) |
|
COMPANY
CONTRIBUTIONS
TO DEFINED
CONTRIBUTION
PLANS
($000)(3) |
|
INSURANCE
PREMIUMS
($000) |
|
TOTAL
($000) |
Devin
McGranahan |
|
127.1 |
|
38.9 |
|
80.0 |
|
2.6 |
|
248.6 |
Matt
Cagwin |
|
76.9 |
|
32.2 |
|
9.4 |
|
0.3 |
|
118.8 |
Gabriella
Fitzgerald |
|
0.1 |
|
— |
|
34.7 |
|
1.4 |
|
36.2 |
Jean
Claude Farah |
|
144.6 |
|
— |
|
7.9 |
|
23.5 |
|
176.0 |
Benjamin
Adams |
|
35.4 |
|
14.5 |
|
10.5 |
|
0.6 |
|
61.0 |
Raj
Agrawal |
|
0.3 |
|
— |
|
36.7 |
|
2.2 |
|
39.2 |
Footnotes:
| (1) | Amounts shown in this column for the NEOs consist of the following: |
| • | For Mr. McGranahan, includes the incremental cost or valuation of personal jet usage ($74.0), personal
use of company car, and relocation expenses ($49.8). Based on a comprehensive security assessment conducted by an independent security
firm, the Board of Directors advised Mr. McGranahan to utilize the Company’s leased aircraft for personal travel at the Company’s
expense. Those personal travel expenses reported in this column were valued on the basis of the aggregate incremental cost to the Company
and represent the amount accrued for payment or paid directly to the third-party vendor from which the Company leases corporate aircraft.
In addition, for Mr. McGranahan, the amount includes relocation expenses in connection with his relocation to the Company’s corporate
headquarters as required per the terms of his offer letter. Relocation expenses included household goods and temporary housing. Per the
terms of his offer letter, a pro-rated portion of expenses incurred by the Company as a result of Mr. McGranahan’s relocation must
be repaid in the event that Mr. McGranahan terminates his employment voluntarily or is terminated by the Company for cause within 24 months
following his relocation. The incremental value associated with the relocation expenses were valued on the basis of the amount reimbursed to the third-party vendor
or Mr. McGranahan, as applicable. |
| • | For Mr. Cagwin, the amounts in
this column include commuting expenses ($57.3) and corporate housing provided by the Company prior to his relocation to the Company’s
corporate headquarters. The incremental cost associated with the commuting expenses were valued on the amount reimbursed directly to Mr. Cagwin. |
| • | For Mr. Adams, the amounts in
this column include commuting expenses and corporate housing provided by the Company prior to his relocation to the Company’s corporate
headquarters. |
| • | For Mr. Farah, the amounts in this column include housing ($108.9), education, and transportation allowances. |
| (2) | Amounts shown in this column represent tax reimbursements paid to the NEOs with respect to relocation
and other expenses. |
| (3) | Amounts shown in this column represent (i) contributions made by the Company on behalf of each of the
NEOs, except for Mr. Farah, to the Company’s Incentive Savings Plan and/or the SISP and (ii) contributions made by the Company on
behalf of Mr. Farah to the CFE Retirement Fund. |
52 | The
Western Union Company
EXECUTIVE
COMPENSATION
The
following table summarizes awards made to our NEOs in 2022.
2022 GRANTS OF PLAN-BASED
AWARDS TABLE
NAME |
|
GRANT
DATE |
|
APPROVAL
DATE |
|
ESTIMATED
POSSIBLE
PAYOUTS UNDER
NON-EQUITY
INCENTIVE PLAN
AWARDS(1) |
|
ESTIMATED FUTURE
PAYOUTS UNDER EQUITY
INCENTIVE PLAN AWARDS(2) |
|
ALL OTHER STOCK AWARDS: NUMBER OF SHARES OF STOCK OR UNITS
(#)(3) |
|
ALL OTHER OPTION AWARDS: NUMBER OF SECURITIES UNDERLYING OPTIONS
(#)(4) |
|
EXERCISE OR BASE PRICE OF OPTION AWARDS
($/Sh) |
|
GRANT
DATE FAIR VALUE OF STOCK AND OPTION AWARDS ($000)(5) |
|
|
|
TARGET ($000) |
|
MAXIMUM ($000) |
|
THRESHOLD (#) |
|
TARGET (#) |
|
MAXIMUM (#) |
|
|
|
|
Devin
McGranahan |
|
|
|
|
|
1,700.0 |
|
2,975.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/24/2022 |
|
2/24/2022 |
|
|
|
|
|
25,779 |
|
85,930 |
|
171,859 |
|
|
|
|
|
|
|
1,807.1 |
|
2/24/2022 |
|
2/24/2022 |
|
|
|
|
|
|
|
|
|
|
|
85,930 |
|
|
|
|
|
1,600.0 |
|
2/24/2022 |
|
2/24/2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
461,096 |
|
18.62 |
|
1,600.0 |
Matt Cagwin |
|
|
|
|
|
97.2 |
|
194.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/5/2022 |
|
8/1/2022 |
|
|
|
|
|
1,527 |
|
5,090 |
|
10,180 |
|
|
|
|
|
|
|
91.5 |
|
8/5/2022 |
|
8/1/2022 |
|
|
|
|
|
|
|
|
|
|
|
61,088 |
|
|
|
|
|
1,000.0 |
Gabriella
Fitzgerald |
|
|
|
|
|
605.0 |
|
1,210.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2022 |
|
2/23/2022 |
|
|
|
|
|
5,889 |
|
19,629 |
|
39,257 |
|
|
|
|
|
|
|
433.8 |
|
2/23/2022 |
|
2/23/2022 |
|
|
|
|
|
|
|
|
|
|
|
39,257 |
|
|
|
|
|
760.0 |
Jean
Claude
Farah |
|
|
|
|
|
550.0 |
|
1,100.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2022 |
|
2/23/2022 |
|
|
|
|
|
4,649 |
|
15,496 |
|
30,992 |
|
|
|
|
|
|
|
342.5 |
|
2/23/2022 |
|
2/23/2022 |
|
|
|
|
|
|
|
|
|
|
|
30,992 |
|
|
|
|
|
600.0 |
Benjamin Adams |
|
|
|
|
|
405.0 |
|
810.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/1/2022 |
|
5/15/2022 |
|
|
|
|
|
|
|
|
|
|
|
83,893 |
|
|
|
|
|
1,500.0 |
Raj
Agrawal |
|
|
|
|
|
650.0 |
|
1,300.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/23/2022 |
|
2/23/2022 |
|
|
|
|
|
8,678 |
|
28,926 |
|
57,852 |
|
|
|
|
|
|
|
639.3 |
|
2/23/2022 |
|
2/23/2022 |
|
|
|
|
|
|
|
|
|
|
|
57,852 |
|
|
|
|
|
1,120.0 |
Footnotes:
(1) | These amounts consist of the target and maximum cash award levels set in 2022 under the Annual Incentive
Plan. The amount actually paid to each NEO is included in the Non-Equity Incentive Plan Compensation column in the 2022 Summary Compensation
Table. In the case of Mr. Cagwin, his target and maximum cash awards were pro-rated to reflect the period during 2022 in which he was
employed by the Company based on his annual approved target of $212.5. In connection with his separation from the Company, Mr. Agrawal
forfeited his 2022 award under the Annual Incentive Plan. Please see “Compensation Discussion and Analysis” for further information
regarding the Annual Incentive Plan. |
(2) | These amounts represent the threshold, target and maximum PSUs granted under the Long-Term Incentive Plan.
As noted above, the Compensation Committee established the performance goal for the first year of the three-year performance period with
the annual goals for the subsequent years in the three-year performance period to be set at the beginning of each applicable year during
the performance period. In accordance with FASB ASC Topic 718, reported in this table is one-third of the full number of shares subject
to the 2022 PSUs for which target revenue growth goal was established in 2022. These PSUs are generally scheduled to vest on February
23, 2025 (or, in the case of Mr. McGranahan, February 24, 2025, and Mr. Cagwin, August 5, 2025), subject to the achievement of performance
metrics related to revenue growth during 2022, with the vesting subject to a TSR payout modifier which could result in the vesting level
based on revenue growth being adjusted by +/-25% based upon the Company’s relative TSR ranking. In connection with Mr. Agrawal’s
departure and as a result of him satisfying the age and service requirements for retirement vesting treatment, Mr. Agrawal is eligible
to receive pro-rated vesting of his 2022 PSUs based on actual performance results and his period of service during the vesting period.
Please see “Compensation Discussion and Analysis” for further information regarding this award. The PSU award includes cash
dividend equivalent rights entitling the recipient to cash dividend equivalents for dividends paid with respect to Company common stock
subject to the award during the PSU vesting period. The cash dividend equivalents are subject to the same vesting conditions as the underlying
PSUs. |
(3) | These amounts represent RSUs granted under the Long-Term Incentive Plan to the NEOs and which vest in
three substantially equal installments on the first, second and third anniversaries of the grant date, provided that the executive is
still employed by the Company on the vesting date or as otherwise provided for pursuant to the Executive Severance Policy, the Long-Term
Incentive Plan or the underlying equity award agreement. In connection with his departure and as a result of satisfying the age and service
requirements for retirement vesting treatment, Mr. Agrawal |
2023
Proxy Statement | 53
EXECUTIVE
COMPENSATION
was eligible to receive prorated vesting
of his 2022 RSUs based on his period of service during the vesting period. Please see “Compensation Discussion and Analysis”
for further information regarding these RSU grants. Each RSU award includes cash dividend equivalent rights entitling the recipient to
cash dividend equivalents for dividends paid with respect to the Company common stock subject to the award during the RSU vesting period.
The cash dividend equivalents are subject to the same vesting conditions as the underlying RSUs.
| (4) | This amount represents stock options granted under the Long-Term Incentive Plan to Mr. McGranahan. These
options were granted subject to vesting in 25% increments on each of the first through fourth year anniversaries of the date of grant,
in each case, provided that Mr. McGranahan is still employed by the Company on the vesting date or as otherwise provided for pursuant
to the Executive Severance Policy, the Long-Term Incentive Plan or the underlying equity award agreement. Please see “Compensation
Discussion and Analysis” for further information regarding these awards. |
| (5) | The amounts shown in this column are valued based on the aggregate grant date fair value computed in accordance
with FASB ASC Topic 718. In the case of the PSUs, in accordance with FASB ASC Topic 718, the aggregate grant date fair value computed
for the 2022 PSUs is based on one-third of the full number of shares subject to the 2022 PSUs for which target revenue growth goal was
established in 2022. The remaining portion of the 2022 PSUs that will be linked to goals for subsequent years will be reported in the
Grants of Plan-Based Awards Table for those years in which the goals are established. See Note 17 to the Consolidated Financial Statements
included in our Annual Report on Form 10-K for the year ended December 31, 2022 for a discussion of the relevant assumptions used in calculating
the amounts. |
NARRATIVE TO SUMMARY
COMPENSATION TABLE AND GRANTS OF PLAN-BASED AWARDS TABLE
As noted in the “Compensation Discussion
and Analysis,” the Company generally executes an offer of employment prior to the time an executive joins the Company which describes
the basic terms of the executive’s employment, including his or her start date, starting salary, bonus target, and long-term incentive
award target. The terms of the executive’s employment are based thereafter on sustained good performance rather than contractual
terms, and the Company’s policies, such as the Executive Severance Policy, will determine the benefits to be received by senior
executives, including our NEOs, upon termination of employment from the Company. Please see the “—Potential Payments Upon
Termination or Change-in-Control” section for a description of the policy.
As noted in the “Compensation Discussion
and Analysis,” under certain circumstances, the Compensation Committee recognizes that special arrangements with respect to an executive’s
employment may be necessary or desirable. Accordingly, during 2022, Mr. Farah was a party to an employment agreement, which reflects competitive
practices in the employment location of Mr. Farah at the time his agreement became effective. The terms of Mr. Farah’s employment
agreement provide for (i) eligibility to participate in an annual incentive program and Long-Term Incentive Plan and (ii) eligibility
to participate in retirement, health, and welfare benefit programs on the same basis as similarly situated employees in the UAE. Mr. Farah’s
employment agreement also includes non-competition, non-solicitation, and confidentiality provisions.
In 2022, the Compensation Committee granted annual
equity grants under the Long-Term Incentive Plan consisting of (i) 60% PSUs (vesting based on revenue goals established each year during
the three-year performance period, subject to a +/- 25% payout modifier for our TSR performance over the three-year performance period),
20% stock options, and 20% service-based RSUs for Mr. McGranahan, and (ii) 60% PSUs (vesting based on revenue goals established each year
during the three-year performance period, subject to a +/- 25% payout modifier for our TSR performance over the three-year performance
period) and 40% service-based RSUs for the other NEOs (excluding Mr. McGranahan,
Mr. Cagwin and Mr. Adams). In the case of Mr. Cagwin,
in lieu of receiving a 2022 long-term incentive award, Mr. Cagwin received a sign-on equity award delivered 80% as time-based RSUs, vesting
in one-third annual installments, and 20% as PSUs with the same performance metrics applicable to the 2022 PSUs delivered to the other
NEOs. In the case of Mr. Adams, in lieu of receiving a 2022 long-term incentive award, Mr. Adams received a sign-on equity award delivered
in the form of time-based RSUs, vesting in one-third annual installments on the first three anniversaries of the grant date. Please see the “Compensation
Discussion and Analysis” section of this
54 | The
Western Union Company
EXECUTIVE
COMPENSATION
Proxy Statement for further information regarding
the 2022 long-term incentive awards, including the performance metrics applicable to the 2022 PSUs.
At its February 2022 meeting, the Compensation
Committee established performance objectives to be considered under the Annual Incentive Plan for the 2022 plan year.
As discussed in the “Compensation Discussion
and Analysis” section of this Proxy Statement, participants are eligible to receive a cash payout ranging from 0% to 175% of target
based on the achievement of pre-established corporate financial and strategic goals. The total payout under the Annual Incentive Plan
for the participating NEOs other than Messrs. McGranahan and Cagwin is subject to a +/- 25% modifier based on the Compensation Committee’s
assessment of individual performance with respect to key performance indicators relating to leadership objectives, an individual compliance
evaluation, an individualized key performance indicator for each NEO, and an ESG metric, which qualitatively assesses progress towards
the Company’s three pillars - Integrity of Global Money Movement, Economic Prosperity, and Diversity, Equity and Inclusion. For
Mr. Cagwin, the total payout under the Annual Incentive Plan is subject to a +/- 25% individual performance modifier based on the CEO’s
recommendations and tied to overall performance for the year as compared to established stretch individual goals. Please see the “Compensation
Discussion and Analysis” section of this Proxy Statement for more information regarding the annual incentive awards, including the
performance metrics applicable to such awards.
SALARY AND BONUS IN PROPORTION TO TOTAL COMPENSATION |
As noted in the “Compensation Discussion
and Analysis” section of this Proxy Statement, the Compensation Committee heavily weighted total direct compensation toward performance-based
elements, which include annual incentive compensation, PSUs and stock options, in order to hold executives accountable and reward them
for the results of the Company. Our Compensation Committee structured the compensation program to give our NEOs substantial
alignment
with stockholders, while also permitting the committee to incentivize the NEOs to pursue performance that it believes increases stockholder
value. Please see the “Compensation Discussion and Analysis” section of this Proxy Statement for a description of the objectives
of our compensation program and overall compensation philosophy.
2023
Proxy Statement | 55
EXECUTIVE
COMPENSATION
The following table provides information regarding
outstanding option awards and unvested stock awards held by each of the NEOs on December 31, 2022.
2022 OUTSTANDING EQUITY
AWARDS AT FISCAL
YEAR-END TABLE
|
|
OPTION AWARDS |
|
|
STOCK AWARDS |
NAME |
|
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS (#)
EXERCISABLE |
|
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS (#)
UNEXERCISABLE |
|
OPTION
EXERCISE
PRICE ($) |
|
OPTION
EXPIRATION
DATE |
|
|
NUMBER OF
SHARES OR
UNITS OF
STOCK THAT
HAVE NOT
VESTED (#) |
|
MARKET
VALUE OF
SHARES
OR UNITS
OF STOCK
THAT HAVE
NOT VESTED
($000)(1) |
|
EQUITY
INCENTIVE
PLAN
AWARDS:
NUMBER OF
UNEARNED
SHARES,
UNITS OR
OTHER
RIGHTS
THAT
HAVE NOT
VESTED (#)(2) |
|
EQUITY
INCENTIVE
PLAN
AWARDS:
MARKET
OR PAYOUT
VALUE OF
UNEARNED
SHARES,
UNITS OR
OTHER
RIGHTS
THAT
HAVE NOT
VESTED
($000)(1) |
Devin McGranahan |
|
|
|
461,096(3) |
|
18.62 |
|
2/24/2032 |
|
|
85,930(5) |
|
1,183.3 |
|
|
|
|
|
537,459 |
|
1,612,379(4) |
|
17.70 |
|
12/27/2031 |
|
|
183,616(6) |
|
2,528.4 |
|
|
|
|
Matt Cagwin |
|
|
|
|
|
|
|
|
|
|
61,088(7) |
|
841.2 |
|
|
|
|
Gabriella
Fitzgerald |
|
|
|
|
|
|
|
|
|
|
39,257(5) |
|
540.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61,444(8) |
|
846.1 |
|
|
|
|
Jean Claude
Farah |
|
|
|
|
|
|
|
|
|
|
30,992(5) |
|
426.8 |
|
|
|
|
|
44,818 |
|
|
|
19.27 |
|
2/19/2025 |
|
|
19,149(9) |
|
263.7 |
|
|
|
|
|
10,127 |
|
|
|
15.99 |
|
2/20/2024 |
|
|
12,014(10) |
|
165.4 |
|
31,915(12) |
|
439.5 |
|
|
|
|
|
|
|
|
|
|
6,808(11) |
|
93.7 |
|
6,064(13) |
|
83.5 |
Benjamin Adams |
|
|
|
|
|
|
|
|
|
|
83,893(14) |
|
1,155.2 |
|
|
|
|
Raj Agrawal |
|
84,034 |
|
|
|
19.27 |
|
9/2/2024 |
|
|
|
|
|
|
|
|
|
|
65,823 |
|
|
|
15.99 |
|
2/20/2024 |
|
|
|
|
|
|
30,522(12) |
|
420.3 |
|
134,063 |
|
|
|
14.00 |
|
2/20/2023 |
|
|
|
|
|
|
5,799(13) |
|
79.9 |
Footnotes:
(1) | The market value of shares or units of stock that have not vested reflects the closing stock price of
$13.77 per share on December 30, 2022. |
(2) | Based on adjusted revenue growth attainment in 2022, no value has been included in this table for the
first tranche of the PSUs granted in 2022 which were scheduled to vest on February 23, 2025 (or, in the case of Mr. McGranahan, February
24, 2025, and Mr. Cagwin on August 5, 2025). Additionally, excluded from this table are 257,788, 15,272, 58,885, and 46,488 PSUs (at target)
for Mr. McGranahan, Mr. Cagwin, Ms. Fitzgerald, and Mr. Farah, respectively, with respect to the portion of the 2022 PSUs associated with
performance goals to be established in 2023 and 2024. In connection with his separation from the Company, Mr. Agrawal’s 2022 PSUs
will vest on a pro-rated basis due to the satisfaction of the age and service requirements for retirement vesting and subject to the achievement
of the underlying performance goals. |
(3) | These options were awarded on February 24, 2022, subject to vesting in 25% increments on each of the first
through fourth year anniversaries of the date of grant; provided that the executive is still employed by the Company on the applicable
vesting date or as otherwise provided for pursuant to the Executive Severance Policy, the Long-Term Incentive Plan or the equity award
agreement. |
(4) | These options were awarded on December 27, 2021, subject to vesting in 25% increments on each of the first
through fourth year anniversaries of the date of grant; provided that the executive is still employed by the Company on the applicable
vesting date or as otherwise provided for pursuant to the Executive Severance Policy, the Long-Term Incentive Plan or the equity award
agreement. |
56 | The
Western Union Company
EXECUTIVE
COMPENSATION
(5) | Represents RSUs that are scheduled to vest in three substantially equal installments on the first, second
and third anniversaries of the grant date commencing on February 23, 2023 (or, in the case of Mr. McGranahan, February 24, 2023); provided
that the executive is still employed by the Company on the vesting date or as otherwise provided for pursuant to the Executive Severance
Policy, the Long-Term Incentive Plan or the equity award agreement. In connection with Ms. Fitzgerald’s and Mr. Agrawal’s
separations from the Company, Mr. Agrawal received and Ms. Fitzgerald will receive prorated vesting of their 2022 RSU award based upon
their period of service during the vesting period in accordance with the terms of the underlying award agreements or, in the case of Ms.
Fitzgerald, the Severance Policy. |
(6) | Represents RSUs that vested on February 1, 2023. |
(7) | Represents RSUs that were awarded on August 5, 2022, which vest in three substantially equal installments
on the first, second and third anniversaries of the grant date; provided that the executive is still employed by the Company on the applicable
vesting date or as otherwise provided for pursuant to the Long-Term Incentive Plan or the equity award agreement. |
(8) | Represents RSUs that were awarded on September 13, 2021, which vest in three substantially equal installments
on the first, second and third anniversaries of the grant date; provided that the executive is still employed by the Company on the applicable
vesting date or as otherwise provided for pursuant to the Executive Severance Policy, the Long-Term Incentive Plan or the equity award
agreement. In connection with Ms. Fitzgerald’s separation from the Company, she will receive a prorated vesting of her 2021 RSU
award based upon her period of service during the vesting period in accordance with the terms of the Severance Policy. |
(9) | Represents RSUs that are scheduled to vest on February 18, 2024; provided that the executive is still
employed by the Company on the vesting date or as otherwise provided for pursuant to the Executive Severance Policy, the Long-Term Incentive
Plan or the equity award agreement. |
(10) | Represents RSUs that vested on February 19, 2023. |
(11) | Represents PSUs that vested on February 19, 2023 based on the Company’s revenue and EBIT performance
over the 2020-2022 performance period. |
(12) | Represents PSUs that are scheduled to vest on February 18, 2024 based on the Company’s revenue and
operating margin performance, measured annually during the 2021-2023 performance period; provided that the executive is still employed
by the Company on the vesting date or as otherwise provided for pursuant to the Executive Severance Policy, the Long-Term Incentive Plan
or the equity award agreement. In accordance with the SEC executive compensation disclosure rules, the amounts reported are based on achieving
the target performance goals. In connection with his separation from the Company, Mr. Agrawal’s PSUs will vest on a pro-rated basis
due to the satisfaction of the age and service requirements for retirement vesting. |
(13) | Represents PSUs that are scheduled to vest on February 18, 2024 based on the Company’s TSR performance
relative to the S&P 500 Index over the 2021-2023 performance period; provided that the executive is still employed by the Company
on the vesting date or as otherwise provided for pursuant to the Executive Severance Policy, the Long-Term Incentive Plan or the equity
award agreement. In accordance with the SEC executive compensation disclosure rules, the amounts reported are based on achieving the threshold
performance goals. In connection with his separation from the Company, Mr. Agrawal’s PSUs will vest on a pro-rated basis due to
the satisfaction of the age and service requirements for retirement vesting. |
(14) | Represents RSUs that were awarded on June 1, 2022, which vest in three substantially equal installments
on the first, second and third anniversaries of the grant date; provided that the executive is still employed by the Company on the applicable
vesting date or as otherwise provided for pursuant to the Executive Severance Policy, the Long-Term Incentive Plan or the equity award
agreement. |
2023
Proxy Statement | 57
EXECUTIVE
COMPENSATION
The following table provides information concerning
the exercise of stock options and vesting of stock awards during 2022 for each of the NEOs.
2022 OPTION EXERCISES
AND STOCK VESTED TABLE
NAME |
|
OPTION AWARDS |
|
STOCK AWARDS |
NUMBER OF
SHARES
ACQUIRED ON
EXERCISE
(#) |
|
VALUE
REALIZED
ON
EXERCISE
($000) |
NUMBER OF
SHARES
ACQUIRED ON
VESTING
(#) |
|
VALUE
REALIZED
ON VESTING
($000) |
Devin McGranahan |
|
— |
|
— |
|
183,616 |
|
3,121.5 |
Matt Cagwin |
|
— |
|
— |
|
— |
|
— |
Gabriella Fitzgerald |
|
— |
|
— |
|
30,722 |
|
454.1 |
Jean Claude Farah |
|
33,401 |
|
59.6 |
|
25,898 |
|
507.9 |
Benjamin Adams |
|
— |
|
— |
|
— |
|
— |
Raj Agrawal |
|
— |
|
— |
|
123,939 |
|
2,001.3 |
The following table provides information regarding compensation that has
been deferred by our NEOs pursuant to the terms of our SISP.
2022 NONQUALIFIED DEFERRED
COMPENSATION TABLE
NAME |
|
EXECUTIVE
CONTRIBUTIONS
IN LAST FY
($000)(1) |
|
REGISTRANT
CONTRIBUTIONS
IN LAST FY
($000)(2) |
|
AGGREGATE
EARNINGS/ (LOSS)
IN LAST FY
($000) |
|
AGGREGATE
WITHDRAWALS/
DISTRIBUTIONS
($000) |
|
AGGREGATE
BALANCE
AT LAST
FYE
($000)(3) |
Devin McGranahan |
|
50.0 |
|
67.8 |
|
(15.8) |
|
— |
|
152.0 |
Matt Cagwin |
|
54.2 |
|
2.2 |
|
(0.3) |
|
— |
|
56.1 |
Gabriella Fitzgerald |
|
32.5 |
|
22.5 |
|
(3.7) |
|
— |
|
67.5 |
Jean Claude Farah |
|
— |
|
— |
|
— |
|
— |
|
— |
Benjamin Adams |
|
— |
|
— |
|
— |
|
— |
|
— |
Raj Agrawal |
|
46.4 |
|
24.5 |
|
(444.2) |
|
— |
|
2,021.6 |
Footnotes:
| (1) | These amounts represent deferrals of the NEO’s salary and compensation received under the Annual
Incentive Plan and are included in the “Salary” and “Non-Equity Incentive Plan Compensation” columns in the 2022
Summary Compensation Table. |
| (2) | These amounts are included in the “All Other Compensation” column in the 2022 Summary Compensation
Table. |
| (3) | Amounts in this column include the following amounts that were previously reported in the Summary Compensation
Table as compensation for 2021 and 2020 (in $000s): Mr. Agrawal–$194.6. |
58 | The
Western Union Company
EXECUTIVE
COMPENSATION
We maintain a defined contribution retirement
plan (the “Incentive Savings Plan” or “ISP”) for our employees on United States payroll, including each of our
NEOs other than Mr. Farah. The ISP is structured with the intention of qualifying under Section 401(a) of the Internal Revenue Code. Under
the ISP, participants are permitted to make contributions up to the maximum allowable amount under the Internal Revenue Code. For 2022,
each participating NEO was eligible to receive a Company contribution equal to 4%
of his or her eligible compensation. During 2022, Mr.
Farah participated in the CFE Retirement Fund, which provides for continued coverage under the French State Social Security System for
French citizens who work outside of France. On behalf of the employee, the CFE Retirement Fund contributes to the National Retirement
Insurance Fund (“CNAV”) allowing the employee to receive pension benefits from the CNAV upon retirement.
SUPPLEMENTAL INCENTIVE SAVINGS PLAN |
We maintain a nonqualified supplemental incentive
savings plan, the SISP, for certain of our employees on U.S. payroll, including each of our NEOs other than Mr. Farah. Under the SISP,
participants may defer up to 80% of their salaries, including commissions and incentive compensation (other than annual bonuses), and
may make a separate election to defer up to 80% of any annual bonuses and up to 100% of any performance-based cash awards they may earn.
The SISP also provides participants the opportunity to receive credits for matching contributions equal to the difference between the
Company contributions that a participant could receive under the ISP but for the contribution and compensation limitations imposed by
the Internal Revenue Code, and the Company contributions allowable to the participant under the ISP. Participants are generally permitted
to choose from among the mutual funds available for investment under the ISP for purposes
of determining the imputed earnings, gains,
and losses applicable to their SISP accounts. The SISP is unfunded. Participants may specify the timing of the payment of their accounts
by choosing either a specified payment date or electing payment upon separation from service (or a date up to five years following separation
from service), and in either case may elect to receive their accounts in a lump sum or in annual or quarterly installments over a period
of up to ten years. With respect to each year’s contributions and imputed earnings, the participant may make a separate distribution
election. Subject to the requirements of Section 409A of the Internal Revenue Code, applicable Internal Revenue Service guidance, and
the terms of the SISP, participants may receive an early payment in the event of a severe financial hardship and may make an election
to delay the timing of their scheduled payment by a minimum of five years.
POTENTIAL PAYMENTS
UPON TERMINATION OR CHANGE-IN-CONTROL
EXECUTIVE SEVERANCE POLICY |
In 2022, we maintained the Executive Severance
Policy for the payment of certain benefits to senior executives, including each of our NEOs, other than Mr. Cagwin, upon termination of
employment from the Company and upon a change in control of the Company. Under the Executive Severance Policy, an eligible executive will
become eligible for benefits if (i) prior to a change-in-control, he or she is involuntarily terminated by the Company other than on account
of death or disability or for cause, or (ii) after a change-in-control, he or she is involuntarily terminated by the Company other than
on account of death or disability or for cause, or he or she terminates employment voluntarily
for “good reason” (which may
arise from a material reduction in title or position, reduction in base salary or bonus opportunity or an increase in the executive’s
commute to his or her current principal working location of more than 50 miles without consent) within 24 months after the date of the
change-in-control. Under the Executive Severance Policy, a change-in-control is generally defined to include:
• | The acquisition by a person or entity of 35% or more of either the outstanding shares of the Company or
the combined voting power of such shares, with certain exceptions; |
2023
Proxy Statement | 59
EXECUTIVE
COMPENSATION
• | An unapproved change in a majority of the Board members within a 24-month period; and |
• | Certain corporate restructurings,
including certain mergers, dissolution and liquidation. |
The Executive Severance Policy provided for the
following severance and change-in-control benefits as of December 31, 2022:
• | A severance payment equal to
the senior executive’s base pay plus target bonus for the year in which the termination occurs (the “base severance pay”)
multiplied by 1.5 (multiplied by two in the case of the CEO and all senior executives who terminate for an eligible reason within 24 months
following a change-in-control). For terminations prior to a change-in-control a senior executive employed by the Company for 12 months
or less would be entitled to receive a severance payment equal to the base severance pay and, for every month employed in excess of 12
months, an additional severance payment equal to a pro rata portion of the base severance pay, up to a maximum severance payment equal
to the senior executive’s base severance pay, multiplied by 1.5 (multiplied by two in the case of the CEO). |
• | A cash payment equal to the lesser
of (i) the senior executive’s prorated target bonus under the Annual Incentive Plan for the year in which the termination occurs
and (ii) the maximum bonus which could have been paid to the senior executive under the Annual Incentive Plan for the year in which the
termination occurs, based on actual Company performance during such year. No bonus will be payable unless the Compensation Committee certifies
that the performance goals under the Annual Incentive Plan have been achieved for the year in which the termination occurs (except for
eligible terminations following a change-in-control). |
• | A lump sum payment equal to the
difference between active employee health care premiums and continuation coverage premiums for 18 months of coverage. |
• | At the discretion of the Compensation
Committee, outplacement benefits may be provided to the executive. |
• | All
awards made pursuant to our Long-Term Incentive Plan, including those that are performance-based, generally will become fully vested
and exercisable if a senior executive is involuntarily terminated without cause or terminates employment for good reason, in either case, |
| within 24 months following a change-in-control.
In such event, the right to exercise stock options will continue for 24 months (36 months in the case of the CEO) after the senior executive’s
termination (but not beyond the applicable expiration date for the stock options). |
• | If a senior executive is involuntarily
terminated without cause and no change-in-control has occurred, awards granted pursuant to our Long-Term Incentive Plan generally will
vest on a prorated basis based on the period served during the vesting period, and stock options will remain exercisable until the end
of severance period under the Executive Severance Policy, but not beyond the applicable expiration date for the stock options. |
• | Any benefits triggered by a change-in-control
are subject to an automatic reduction to avoid the imposition of excise taxes under Section 4999 of the Internal Revenue Code in the event
such reduction would result in a better after-tax result for the executive. |
The provision of severance benefits under the
Executive Severance Policy is conditioned upon the executive executing an agreement and release which includes, among other things, non-competition
and non-solicitation restrictive covenants, as well as a release of claims against the Company. These restrictive covenants vary in duration,
but generally do not exceed two years.
As noted earlier, Mr. Farah is subject to an
employment agreement, which is a customary practice for executives located in the UAE. Under the terms of Mr. Farah’s employment
agreement, he is required to receive three months’ notice of termination of employment or, in lieu of such notice, three months
of pay. In addition, Mr. Farah is also eligible for statutory end of service gratuity/severance amounts in accordance with local law.
Any amounts due to Mr. Farah under the Executive Severance Policy will be reduced by any end-of-service gratuity/severance paid under
the terms of his employment agreement or as required by local law.
As noted in the “Compensation Discussion
and Analysis,” during 2022 Mr. Agrawal separated from the Company. Due to his satisfaction of the age and service requirements under
his outstanding equity award agreements, Mr. Agrawal became eligible for retirement vesting in accordance with the terms of these agreements
(estimated value $13.77, based on the closing stock price on December 30, 2022 and assuming target payout for the PSUs).
60 | The
Western Union Company
EXECUTIVE
COMPENSATION
SEVERANCE POLICY FOR TIER I EMPLOYEES |
As of December 31, 2022, we maintained the Western
Union Company Severance Policy (Tier I Employees) for the benefit of certain eligible employees of the Company, including Mr. Cagwin,
upon a qualifying termination of employment with the Company. Under the Severance Policy for Tier I Employees, an eligible employee will
become eligible for benefits if the employee experiences an involuntary termination of employment with the Company as a direct result
of position elimination or reduction in force (excluding employees who are offered a comparable position with either the Company or a
successor or accept employment with an such entity).
In general, the Severance Policy for Tier I Employees
provided for the following benefits for eligible employees as of December 31, 2022:
• | A lump sum cash severance
payment equal to a fixed number of weeks or months of such employee’s annual rate of base cash compensation as of the
employee’s termination date (ranging between two months and twelve months for salaried employees), with the amount of severance determined based upon the employee’s
number of years of service and annual rate of base cash compensation as of the termination date; and |
| • | A lump sum payment equal to the
difference between active employee health care premiums and continuation coverage premiums for the duration of the employee’s applicable
severance period; |
The provision of severance benefits under the
Severance Policy for Tier I Employees is conditioned upon the employee executing an agreement and release which includes, among other
things, non-solicitation, non-disclosure, confidentiality, and non-disparagement restrictive covenants, as well as a
release of claims against the Company.
For each of the NEOs serving as executive officers
as of December 31, 2022, we have quantified the potential payments upon termination under various termination circumstances in the tables
set forth below. These tables assume that the covered termination took place on December 31, 2022. As of December 31, 2022, none of our
continuing NEOs were eligible for retirement vesting. As noted in the “Compensation Discussion and Analysis,” on February 24, 2023, the Company determined that Gabriella Fitzgerald would cease
serving as President, North America, effective as of March 10, 2023. Upon her departure, Ms. Fitzgerald became eligible for benefits under
the Executive Severance Policy for an involuntary termination other than for death, disability or cause, as described below.
2023
Proxy Statement | 61
EXECUTIVE
COMPENSATION
PAYMENTS UPON TERMINATION
OR
CHANGE-IN-CONTROL TABLES
TERMINATION FOLLOWING A CHANGE-IN-CONTROL(1) |
NAME |
|
SEVERANCE
($000)(2) |
|
WELFARE
BENEFITS
($000)(3) |
|
LONG-TERM INCENTIVES(4) |
|
DEU
ACCRUAL
($000) |
|
TOTAL
($000) |
|
|
|
STOCK
OPTIONS
($000) |
|
PSUs
($000) |
|
RSUs
($000) |
|
|
Devin McGranahan |
|
3,686.0 |
|
31.0 |
|
— |
|
3,549.7 |
|
3,711.7 |
|
495.7 |
|
11,474.1 |
Matt Cagwin |
|
375.2 |
|
— |
|
— |
|
210.3 |
|
841.2 |
|
35.9 |
|
1,462.6 |
Gabriella Fitzgerald |
|
1,764.5 |
|
11.0 |
|
— |
|
810.9 |
|
1,386.7 |
|
178.9 |
|
4,152.0 |
Jean Claude Farah |
|
2,364.0 |
|
— |
|
— |
|
1,340.3 |
|
855.9 |
|
246.5 |
|
4,806.7 |
Benjamin Adams |
|
1,089.9 |
|
30.8 |
|
— |
|
— |
|
1,155.2 |
|
59.1 |
|
2,335.0 |
INVOLUNTARY TERMINATION OTHER THAN FOR DEATH, DISABILITY, OR CAUSE |
NAME |
|
SEVERANCE
($000)(2) |
|
WELFARE
BENEFITS
($000)(3) |
|
LONG-TERM INCENTIVES(4) |
|
DEU
ACCRUAL
($000) |
|
TOTAL
($000) |
|
|
|
STOCK
OPTIONS
($000) |
|
PSUs
($000) |
|
RSUs
($000) |
|
|
Devin McGranahan |
|
3,686.0 |
|
31.0 |
|
— |
|
— |
|
2,528.4 |
|
172.6 |
|
6,418.0 |
Matt Cagwin |
|
375.2 |
|
3.3 |
|
— |
|
— |
|
— |
|
— |
|
378.5 |
Gabriella Fitzgerald |
|
1,764.5 |
|
11.0 |
|
— |
|
— |
|
125.8 |
|
12.9 |
|
1,914.2 |
Jean Claude Farah |
|
1,839.0 |
|
— |
|
— |
|
466.7 |
|
321.9 |
|
109.7 |
|
2,737.3 |
Benjamin Adams |
|
1,089.9 |
|
30.8 |
|
— |
|
— |
|
— |
|
— |
|
1,120.7 |
DEATH OR DISABILITY |
NAME |
|
SEVERANCE
($000) |
|
WELFARE
BENEFITS
($000) |
|
LONG-TERM INCENTIVES(4) |
|
DEU ACCRUAL
($000) |
|
TOTAL
($000) |
|
|
|
STOCK
OPTIONS
($000) |
|
PSUs
($000) |
|
RSUs
($000) |
|
|
Devin McGranahan |
|
— |
|
— |
|
— |
|
3,549.7 |
|
3,711.7 |
|
495.7 |
|
7,757.1 |
Matt Cagwin |
|
— |
|
— |
|
— |
|
210.3 |
|
841.2 |
|
35.9 |
|
1,087.4 |
Gabriella Fitzgerald |
|
— |
|
— |
|
— |
|
810.9 |
|
1,386.7 |
|
178.9 |
|
2,376.5 |
Jean Claude Farah |
|
— |
|
— |
|
— |
|
1,340.3 |
|
855.9 |
|
246.5 |
|
2,442.7 |
Benjamin Adams |
|
— |
|
— |
|
— |
|
— |
|
1,155.2 |
|
59.1 |
|
1,214.3 |
Footnotes:
| (1) | Under the Executive Severance Policy, following a change-in-control, an eligible executive will become
entitled to severance benefits if he or she is involuntarily terminated by the Company other than on account of death or disability or
for cause, or he or she terminates employment voluntarily for good reason within 24 months after the date of the change-in-control. Under
the Severance Policy for Tier I Employees, Mr. Cagwin is not entitled to enhanced severance in the event of a change-in-control, and consequently
the cash severance and welfare benefit amounts reflected here represent the severance benefits to which he would be entitled under that
policy in the event of a qualifying termination. |
| (2) | In accordance with the Executive Severance Policy, amounts in this column represent severance payments
equal to (i) the lesser of the NEO’s (x) 2022 target bonus and (y) 2022 bonus based on actual performance, plus (ii) 1.5 times (two
times in the case of the CEO and in the case of all senior executives who terminate for an eligible reason within 24 months following
a change-in-control) the sum of the NEO’s base salary and target bonus, with the exception of Mr. McGranahan, Ms. Fitzgerald and
Mr. Adams, who have each been with the Company for less than two years as of December 31, 2022. Due to this fact, in accordance with the
Executive Severance Policy in effect on December 31, 2022, the amounts for Mr. McGranahan, Ms. Fitzgerald and Mr. Adams represent payments
equal to 1 times, 1.25 times, and 1 times, respectively, the sum of his or her base salary and target bonus for the current year in the
case of an involuntary termination not in connection with a change in control. In accordance with the Severance Policy for Tier I Employees,
the amount in this column for Mr. Cagwin represents 6 months of his annual rate of base cash compensation as of December 31, 2022. |
| (3) | Amounts in this column represent a lump sum cash payment equal to the product of (i) the difference in
cost between the NEO’s actual health premiums and COBRA health premiums (if applicable) as of December 31, 2022, and (ii) 18, the
number of months of continuing COBRA coverage (or, in the case of Mr. Cagwin, 6, the number of months in his severance period pursuant
to the Severance Policy for Tier I Employees). |
62 | The
Western Union Company
EXECUTIVE
COMPENSATION
| (4) | Amounts in these columns reflect the long-term incentive awards to be received upon a termination or a
change-in-control calculated in accordance with the Executive Severance Policy and the Long-Term Incentive Plan. In the case of stock
grants, the equity value represents the value of the shares determined by multiplying the closing stock price of $13.77 per share on December
30, 2022 by the number of unvested RSUs or, in the case of PSUs, by the number of shares to be awarded based on target achievement. In
the case of option awards, the equity value was determined by multiplying (i) the spread between the exercise price and the closing stock
price of $13.77 per share on December 30, 2022 and (ii) the number of unvested option shares that would vest following a qualifying termination
or termination due to death or disability. The calculation with respect to unvested long-term incentive awards reflects the following
additional assumptions under the Executive Severance Policy and the Long-Term Incentive Plan: |
EVENT |
|
STOCK OPTIONS** |
|
RSUs** |
|
PSUs |
Change-in-control and qualifying termination within subsequent 24-month period |
|
Accelerate |
|
Accelerate
Accrued dividend equivalents would be distributed on accelerated RSUs. |
|
Accelerated vesting and award is payable to the extent earned based on actual
performance results
Accrued dividend equivalents would be distributed on accelerated PSUs (excluding
PSUs with vesting based solely on TSR performance and granted prior to 2022). |
Change-in-control (without termination of employment) |
|
Vesting continues under normal terms |
|
Vesting continues under normal terms |
|
Vesting continues under normal terms |
Involuntary termination without cause (outside the 24-month period following
a change-in-control)*
*If the NEO would satisfy the age and service requirements for retirement,
then the NEO would receive retirement vesting under this termination scenario. |
|
Prorated vesting by grant based on period served during vesting period |
|
Prorated vesting by grant based on period served during vesting period;
if termination occurs prior to the one-year anniversary of the grant date, the awards are forfeited
Accrued dividend equivalents would be distributed on accelerated RSUs. |
|
Prorated vesting by grant based on actual performance results and period
served during vesting period; if termination occurs prior to the one-year anniversary of the grant date, the awards are forfeited
Accrued dividend equivalents would be distributed on accelerated PSUs (excluding
PSUs with vesting based solely on TSR performance and granted prior to 2022). |
Death or disability |
|
Accelerate |
|
Accelerate
Accrued dividend equivalents would be distributed on accelerated RSUs. |
|
Accelerated vesting and award is payable to the extent earned based on actual
performance results
Accrued dividend equivalents would be distributed on accelerated PSUs (excluding
PSUs with vesting based solely on TSR performance and granted prior to 2022). |
Retirement10 |
|
Prorated vesting by grant based on period served during vesting period, with an exercise period equal to the earlier of (i) two years post-termination (three years, in the case of the CEO if termination is a severance-eligible event) and (ii) the expiration date |
|
Prorated vesting by grant based on period served during vesting period
Accrued dividend equivalents would be distributed on accelerated RSUs. |
|
Prorated vesting by grant based on actual performance results and period
served during vesting period
Accrued dividend equivalents would be distributed on accelerated PSUs (excluding
PSUs with vesting based solely on TSR performance and granted prior to 2022). |
| ** | The new hire awards for Mr. McGranahan provide for accelerated vesting in the event of a termination by
the Company other than for cause or by Mr. McGranahan for good reason or in the event of a change in control in which the awards are not
assumed by the surviving company. |
2023
Proxy Statement | 63
EXECUTIVE
COMPENSATION
RISK MANAGEMENT AND
COMPENSATION
Appropriately incentivizing behaviors which foster
the best interests of the Company and its stockholders is an essential part of the compensation-setting process. The Company believes
that risk-taking is necessary for continued innovation and growth, but that risks should be encouraged within parameters that are appropriate
for the long-term health and sustainability of the business. As part of its compensation setting process, the Company evaluates the merits
of its compensation programs through a comprehensive review of its compensation policies and programs to determine whether they encourage
unnecessary or inappropriate risk-taking by the Company’s executives and employees below the executive level. Based on this review,
the Company has concluded that the risks arising from its compensation programs are not reasonably likely to have a material adverse effect
on the Company.
Management and the independent compensation consultant
review the Company’s compensation programs, including the broad-based employee programs and the programs tied to the performance
of individual business units. The team maps the level of “enterprise” risk for each business area, as established through
the Company’s enterprise risk management oversight process, with the level of compensation risk for the associated incentive programs.
In developing the risk assessment, the team reviews the compensation programs within each business area for:
| • | The mix of fixed versus variable
pay; |
| • | The performance metrics to which
pay is tied; |
| • | Whether the pay opportunity is
capped; |
| • | Whether “clawback”
adjustments are permitted; |
| • | The use of equity awards; and |
| • | Whether stock ownership guidelines
apply. |
Annual incentive awards and long-term incentive
awards granted to executives are tied primarily to corporate performance goals, including revenue and operating margin growth, and strategic
performance objectives. The Compensation Committee believes that these metrics encourage performance that supports the business as a whole.
The executive annual incentive awards include a maximum payout opportunity equal to 175% of target, subject to a +/-25% individual performance-based
modifier for NEOs other than Mr. McGranahan. Our executives are also expected to meet share ownership guidelines in order to align the
executives’ interests with those of our stockholders. Further, the Company’s clawback policy permits the Company to recover
incentive compensation paid to designated executives (including our officers who are subject to Section 16 of the Exchange Act as well
as the Company’s CCO) in the event of an accounting restatement or if the executive engaged in detrimental conduct, as defined in
the clawback policy. This policy helps to discourage inappropriate risks, as executives will be held accountable for misconduct which
is harmful to the Company’s financial and reputational health. In addition, the Company’s clawback policy and specific clawback
provisions in its annual and long-term incentive award agreements allow the Company to “claw back” executive pay if the executive
engages in conduct that is determined to have contributed to material compliance failures, subject to applicable law.
64 | The
Western Union Company
CEO
PAY RATIO
As required by Section 953(b) of the Dodd-Frank
Act, we are providing the following disclosure about the relationship of the annual total compensation of our employees to the annual
total compensation of Mr. McGranahan, our CEO.
To understand this disclosure, we think it is
important to give context to our operations. As noted above, The Western Union Company provides people and businesses with fast, reliable,
and convenient ways to send money and make payments around the world. As a global organization, approximately 86% of our employees are
located outside of the United States, with our employees located in more than 50 countries. We strive to create a competitive global compensation
program in terms of both the position and the geographic location in which the employee is located. As a result, our compensation program
varies amongst each local market, in order to allow us to provide a competitive total rewards package.
Given the leverage of our executive compensation
program towards performance-based elements, we expect that our pay ratio disclosure will fluctuate year-to-year based on the Company’s
performance against the pre-established performance goals.
Ratio
For 2022,
| • | The median of the annual total
compensation of all of our employees, other than Mr. McGranahan, was $36,144. |
| • | Mr. McGranahan’s annual
total compensation, as reported in the Total column of the 2022 Summary Compensation Table, was $7,241.7 thousand. |
| • | Based on this information, the
ratio of the annual total compensation of Mr. McGranahan to the median of the annual total compensation of all employees is estimated
to be 200 to 1. |
Identification of Median Employee
We selected November 1, 2022 as the date on which
to determine our median employee. As of that date, we had approximately 8,900 employees. For purposes of identifying the median employee,
we considered the aggregate of the following compensation elements for each of our employees, as compiled from the Company’s payroll
records:
We selected the above compensation elements as
they represent the Company’s principal broad-based compensation elements. In addition, we measured compensation for purposes of
determining the median employee using the 12-month period ending December 31, 2022.
Using this methodology, we determined that our
median employee was a full-time, salaried employee working in Europe. For purposes of this disclosure, we converted such employee’s
compensation from the employee’s local currency to U.S. dollars using an exchange rate as of December 31, 2022. In determining the
annual total compensation of the 2022 median employee, we calculated such employee’s 2022 compensation in accordance with Item 402(c)(2)(x)
of Regulation S-K as required pursuant to SEC executive compensation disclosure rules. This calculation is the same calculation used to
determine total compensation for purposes of the 2022 Summary Compensation Table with respect to each of the NEOs.
2023
Proxy Statement | 65
PAY
VERSUS PERFORMANCE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PAY VERSUS PERFORMANCE |
YEAR(1) |
|
SUMMARY
COMPENSATION
TABLE TOTAL
FOR
MCGRANAHAN
($000)(2) |
|
SUMMARY
COMPENSATION
TABLE TOTAL
FOR ERSEK
($000)(2) |
|
COMPENSATION
ACTUALLY
PAID TO
MCGRANAHAN
($000)(3) |
|
COMPENSATION
ACTUALLY
PAID TO
ERSEK ($000)(3) |
|
AVERAGE
SUMMARY
COMPENSATION
TABLE TOTAL
FOR
NON-PEO NEOS
($000)(2) |
|
AVERAGE
COMPENSATION
ACTUALLY
PAID TO
NON-PEO NEOS
($000)(3) |
|
VALUE
OF INITIAL
FIXED $100 INVESTMENT
BASED ON:(4) |
|
NET
INCOME
($000,000) |
|
ADJUSTED
REVENUE
($000,000)(6) |
|
|
|
|
|
|
|
TOTAL SHAREHOLDER RETURN
($) |
|
PEER GROUP
TOTAL SHAREHOLDER
RETURN
($)(5) |
|
|
2022 |
|
7,241.7 |
|
N/A |
|
782.4 |
|
N/A |
|
1,975.9 |
|
1,109.0 |
|
59.44 |
|
118.77 |
|
910.6 |
|
4,512 |
2021 |
|
14,117.4 |
|
10,834.6 |
|
9,871.5 |
|
639.4 |
|
3,277.1 |
|
1,402.5 |
|
72.40 |
|
132.75 |
|
805.8 |
|
5,012 |
2020 |
|
N/A |
|
10,336.4 |
|
N/A |
|
(7,515.9) |
|
3,566.7 |
|
1,069.0 |
|
85.33 |
|
98.31 |
|
744.3 |
|
4,918 |
| (1) | The Principal Executive Officer (“PEO”) and NEOs for the applicable years were as follows: |
| - | 2022: Devin McGranahan served as the Company’s Chief Executive Officer for the entirety of 2022
and the Company’s other NEOs were: Matt Cagwin; Jean Claude Farah; Gabriella Fitzgerald; Benjamin Adams; and Raj Agrawal. |
| - | 2021: Devin McGranahan assumed the role of the Company’s Chief Executive Officer on December 27,
2021 and Hikmet Ersek served as Chief Executive Officer during 2021 through his December 27, 2021 retirement. The Company’s other
NEOs for 2021 were: Raj Agrawal; Michelle Swanback; Jean Claude Farah; and Gabriella Fitzgerald. |
| - | 2020: Hikmet Ersek served as the Company’s Chief Executive Officer for the entirety of 2020 and
the Company’s other NEOs for 2021 were: Raj Agrawal; Michelle Swanback; Jean Claude Farah; and Khalid Fellahi. |
| (2) | Amounts reported in this column represent (i) the total compensation reported in the Summary Compensation
Table for the applicable year in the case of Messrs. McGranahan and Ersek and (ii) the average of the total compensation reported in the
Summary Compensation Table for the applicable year for the Company’s NEOs for the applicable year other than the PEOs for such years. |
| (3) | To calculate compensation actually paid (“CAP”), adjustments were made to the amounts reported
in the Summary Compensation Table for the applicable year. A reconciliation of the adjustments for Messrs. McGranahan and Ersek and for
the average of the other NEOs is set forth following the footnotes to this table. |
| (4) | Pursuant to rules of the SEC, the comparison assumes $100 was invested on December 31, 2019. Historic
stock price performance is not necessarily indicative of future stock price performance. |
| (5) | The TSR Peer Group consists of the Standard & Poor’s Composite – 500 Financials Index
(the “S&P 500 Financials Index”), an independently prepared index that includes companies in the financial services industry. |
| (6) | As noted in the “Compensation Discussion and Analysis,” for 2022, the Compensation Committee
determined that adjusted revenue continues to be viewed as a core driver of the Company’s performance and stockholder value creation
and, accordingly, was utilized as a component in both the Annual Incentive Plan and long-term incentive program. Total adjusted revenue
represents revenue adjusted to exclude Argentina inflation and the effect of currency fluctuations. In 2022, adjusted revenue also excluded
the impact of Business Solutions revenues in light of the pending agreement to sell the business, and the impact of Russia/Belarus revenues
as a result of the conflict in Ukraine. |
66 | The Western Union Company |
EXECUTIVE
COMPENSATION
CAP
ADJUSTMENTS |
YEAR |
|
SUMMARY
COMPENSATION
TABLE TOTAL
($000)(a) |
|
MINUS
GRANT DATE
FAIR
VALUE OF STOCK
OPTION AND
STOCK AWARDS
GRANTED IN
FISCAL YEAR
($000)(b) |
|
PLUS
FAIR VALUE
AT FISCAL
YEAR-END OF OUTSTANDING
AND UNVESTED
STOCK OPTION
AND STOCK
AWARDS GRANTED
IN FISCAL YEAR
($000)(c) |
|
PLUS/(MINUS)
CHANGE IN
FAIR VALUE OF
OUTSTANDING AND
UNVESTED STOCK
OPTION AND STOCK
AWARDS GRANTED
IN PRIOR FISCAL YEARS
($000)(d) |
|
PLUS
FAIR VALUE
AT VESTING
OF STOCK
OPTION
AND STOCK AWARDS
GRANTED IN FISCAL
YEAR THAT VESTED
DURING FISCAL YEAR
($000)(e) |
|
PLUS/(MINUS)
CHANGE IN
FAIR VALUE AS
OF VESTING
DATE
OF STOCK
OPTION
AND STOCK
AWARDS
GRANTED IN
PRIOR
YEARS FOR
WHICH
APPLICABLE
VESTING
CONDITIONS
WERE
SATISFIED
DURING
FISCAL YEAR
($000)(f) |
|
MINUS
FAIR VALUE
AS
OF PRIOR FISCAL
YEAR-END OF STOCK
OPTION AND STOCK AWARDS
GRANTED IN PRIOR FISCAL
YEARS THAT FAILED
TO MEET APPLICABLE
VESTING CONDITIONS
DURING FISCAL YEAR
($000)(g) |
|
PLUS
DOLLAR VALUE OF
DIVIDENDS OR
OTHER EARNINGS
PAID ON STOCK
AWARDS IN FISCAL
YEAR AND PRIOR TO
VESTING DATE
($000)(h) |
|
EQUALS
COMPENSATION
ACTUALLY PAID
($000) |
Devin
McGranahan |
2022 |
|
7,241.7 |
|
(5,007.1) |
|
1,723.5 |
|
(2,527.5) |
|
— |
|
(648.2) |
|
— |
|
— |
|
782.4 |
2021 |
|
14,117.4 |
|
(13,100.0) |
|
8,854.1 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
9,871.5 |
Hikmet
Ersek |
2021 |
|
10,834.6 |
|
(8,200.0) |
|
3,064.3 |
|
(5,871.4) |
|
— |
|
811.9 |
|
— |
|
— |
|
639.4 |
2020 |
|
10,336.4 |
|
(8,200.0) |
|
4,865.4 |
|
(13,777.1) |
|
— |
|
(740.6) |
|
— |
|
— |
|
(7,515.9) |
Other
NEOs (Average)(i) |
2022 |
|
1,975.9 |
|
(1,297.4) |
|
572.5 |
|
(164.7) |
|
— |
|
22.7 |
|
— |
|
— |
|
1,109.0 |
2021 |
|
3,277.1 |
|
(2,200.0) |
|
1,115.4 |
|
(854.6) |
|
— |
|
64.6 |
|
— |
|
— |
|
1,402.5 |
2020 |
|
3,566.7 |
|
(2,412.5) |
|
1,670.1 |
|
(1,693.2) |
|
— |
|
(62.1) |
|
— |
|
— |
|
1,069.0 |
| (a) | Represents Total Compensation as reported in the Summary Compensation Table for the indicated fiscal year.
With respect to the Other NEOs, amounts shown represent averages. |
| (b) | Represents the grant date fair value of the stock option and stock awards granted during the indicated
fiscal year, computed in accordance with the methodology used for financial reporting purposes. |
| (c) | Represents the fair value as of the indicated fiscal year-end of the outstanding and unvested option awards
and stock awards granted during such fiscal year, computed in accordance with the methodology used for financial reporting purposes. |
| (d) | Represents the change in fair value during the indicated fiscal year of the outstanding and unvested option
awards and stock awards held by the applicable NEO as of the last day of the indicated fiscal year, computed in accordance with the methodology
used for financial reporting purposes and, for awards subject to performance-based vesting conditions, based on the probable outcome of
such performance-based vesting conditions as of the last day of the fiscal year. |
| (e) | Represents the fair value at vesting of the option awards and stock awards that were granted and vested
during the indicated fiscal year, computed in accordance with the methodology used for financial reporting purposes. |
| (f) | Represents the change in fair value, measured from the prior fiscal year-end to the vesting date, of each
option award and stock award that was granted in a prior fiscal year and which vested during the indicated fiscal year, computed in accordance
with the methodology used for financial reporting purposes. |
| (g) | Represents the fair value as of the last day of the prior fiscal year of the option award and stock awards
that were granted in a prior fiscal year and which failed to meet the applicable vesting conditions in the indicated fiscal year, computed
in accordance with the methodology used for financial reporting purposes. |
| (h) | Represents the dollar value of any dividends or other earnings paid on stock awards in the indicated fiscal
year and prior to the vesting date that are not otherwise included in the total compensation for the indicated fiscal year. The Company
does not pay dividends or other earnings on unvested stock awards. |
| (i) | See footnote 1 above for the NEOs included in the average for each year. |
EXECUTIVE
COMPENSATION
Relationship Between Pay and Performance
We believe the “Compensation Actually Paid”
in each of the years reported above and over the three-year cumulative period are reflective of the Compensation Committee’s emphasis
on “pay-for-performance” as the “Compensation Actually Paid” fluctuated year-over-year, primarily due to the result
of our varying levels of achievement against pre-established performance goals under our Annual Incentive Plan and our Long-Term Incentive
Plan, including our adjusted revenue performance, and our stock performance.
TSR: Company versus Peer Group and CAP
As shown in the chart below, the Company’s
three-year cumulative TSR for the period of 2020-2022 is less than the three-year cumulative TSR for companies included in our peer group
TSR. While the average CAP for the other NEOs is relatively aligned with the Company’s TSR, the CAP for the PEO position was impacted
by the new hire grants received by Mr. McGranahan in 2021 in connection with the commencement of his employment and the CAP for Mr.
Ersek in 2020 was impacted by the decline in the Company’s stock price from December 31, 2019 through December 31, 2020.
COMPENSATION ACTUALLY PAID (CAP) VS WESTERN
UNION
AND PEER GROUP TSR
68 | The Western Union Company |
EXECUTIVE
COMPENSATION
CAP
Versus Adjusted Revenue (Company Selected Measure)
The chart below demonstrates the relationship between CAP amounts for our PEO and each of our NEOs and our adjusted revenue for the applicable fiscal year. Variations in the CAP amounts for our PEO and other NEOs are due in large part to the significant emphasis the Company places on long-term incentives, the value of which fluctuates most significantly based on the vesting level of our PSU awards and changes in stock price over time. As noted in the “Compensation Discussion and Analysis,” the Compensation Committee |
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determined that adjusted revenue continues to be viewed as a core driver of the Company’s performance and stockholder value creation and, accordingly, was utilized as a component in both the Annual Incentive Plan and long-term incentive program. While the average CAP for the other NEOs is relatively aligned with the Company’s adjusted revenue performance, the CAP for the PEO position was impacted by the new hire grants received by Mr. McGranahan in 2021 in connection with the commencement of his employment and the CAP for Mr. Ersek in 2020 was impacted by the decline in the Company’s stock price from December 31, 2019 through December 31, 2020. |
COMPENSATION ACTUALLY PAID (CAP) VS ADJUSTED
REVENUE
EXECUTIVE
COMPENSATION
CAP
Versus Net Income
The
chart below demonstrates the relationship between CAP amounts for our PEO and our other NEOs and our net income. Net income is not
a component of our executive compensation program. Variations in the CAP amounts for |
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our
PEO and other NEOs are due in large part to the significant emphasis the Company places on long-term incentives, the value of which
fluctuates most significantly based on the vesting level of our PSU awards and changes in stock price over time. |
COMPENSATION ACTUALLY PAID (CAP) VS NET INCOME
Performance Measures Used to Link Company
Performance and CAP to the NEOs
Below is a list of financial performance measures,
which in the Company’s assessment represent the most important financial performance measures used by the Company to link CAP to
the NEOs for 2022 to Company performance. As noted in the “Compensation Discussion and Analysis,” the Company used both financial
and non-financial performance measures in order to link compensation paid to NEOs to Company performance in 2022. To measure individual
performance against key objectives for the Company as well as the executive’s success in fulfilling the executive’s responsibilities,
the total payout under the Annual Incentive Plan for the participating NEOs other than Mr. McGranahan in 2022 was subject to a +/- 25%
modifier based on the Compensation Committee’s assessment versus non-financial performance metrics relating to leadership, compliance
and ESG (as well as an individual performance
goal tailored to each participating NEO’s functional area). These goals were included
in the Annual Incentive Plan design to reinforce these objectives as priorities throughout the organization. Please see the “Compensation
Discussion and Analysis” for further information regarding how each of these goals is calculated as well as the Company’s
use of strategic and non-financial goals in its executive compensation program.
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Adjusted Revenue |
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Adjusted Profit Margin |
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Adjusted Earnings Per Share |
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Consumer-to-Consumer westernunion.com Money Transfer Revenue |
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Total Shareholder Return |
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Company Stock Price |
70 | The Western Union Company |