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DEF 14A
FIRST DATA CORP filed this Form DEF 14A on 03/15/2017
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DEF 14A
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No. )

Filed by the Registrant ☒                 Filed by a Party other than the Registrant ☐

Check the appropriate box:

 

Preliminary Proxy Statement

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

Definitive Proxy Statement

 

Definitive Additional Materials

 

Soliciting Material Pursuant to §240.14a-12

First Data Corporation

 

 

(Name of Registrant as Specified In Its Charter)

 

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

 

No fee required.

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
  (1) Title of each class of securities to which transaction applies:
  (2) Aggregate number of securities to which transaction applies:

 

  (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
  (4) Proposed maximum aggregate value of transaction:

 

  (5) Total fee paid:

 

Fee paid previously with preliminary materials.

 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
  (1) Amount Previously Paid:
  (2) Form, Schedule or Registration Statement No.:
  (3) Filing Party:
  (4) Date Filed:


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LOGO

Notice of 2017 Annual Meeting of Shareholders

April 25, 2017

The 2017 Annual Meeting of Shareholders of First Data Corporation will be held on April 25, 2017, at 8:00 a.m. Eastern Time, at The Park Lane Hotel, 36 Central Park South, New York, New York 10019. Shareholders will be asked to:

 

1. Elect as directors the 2 nominees named in the attached Proxy Statement;
2. Ratify the appointment of Ernst & Young LLP as First Data’s independent registered public accounting firm for our fiscal year ending December 31, 2017; and
3. Transact any other business that properly comes before the meeting.

The Proxy Statement accompanying this Notice describes each of these items in detail. The Proxy Statement contains other important information that you should read and consider before you vote.

The record date for the Annual Meeting is February 27, 2017. If you held First Data Class A common stock or Class B common stock at the close of business on that date, you are entitled to vote at the Annual Meeting.

First Data is furnishing proxy materials to its shareholders through the Internet as permitted under the rules of the Securities and Exchange Commission. Under these rules, many shareholders will receive a Notice of Internet Availability of Proxy Materials instead of a paper copy of the Notice of Annual Meeting of Shareholders and Proxy Statement, our proxy card, and our Annual Report on Form 10-K. We believe this process gives us the opportunity to serve you more efficiently by making the proxy materials available quickly online and reducing costs associated with printing and postage. Shareholders who do not receive a Notice of Internet Availability of Proxy Materials will receive a paper copy of the proxy materials by mail.

 

  

Sincerely,

 

LOGO

 

        March 15, 2017   

Adam L. Rosman

Executive Vice President, General Counsel, and Secretary

Your vote is important. Instructions on how to vote are contained in our Proxy Statement and in the Notice of Internet Availability of Proxy Materials. Please cast your vote by telephone or over the Internet as described in those materials. Alternatively, if you requested a copy of the proxy/voting instruction card by mail, you may mark, sign, date, and return the proxy/voting instruction card in the envelope provided.


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LOGO

Proxy Statement Summary

2017 Annual Meeting of Shareholders

 

Date and Time:                April 25, 2017
   8:00 a.m. Eastern Time
Place:    The Park Lane Hotel
   36 Central Park South
   New York, New York 10019
Record Date:    February 27, 2017

Voting Matters and Board Recommendations

 

     Voting Matter   

Board Vote

Recommendation

  

Page Number

with More

Information

Proposal 1

   Election of directors    For all nominees    7

Proposal 2

   Ratify the appointment of Ernst & Young LLP as First Data’s independent registered public accounting firm    For    8

This Proxy Statement Summary contains highlights of certain information in this Proxy Statement. Because it is only a summary, it does not contain all the information that you should consider before voting. Please review the complete Proxy Statement and First Data’s Annual Report on Form 10-K for additional information.

 


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LOGO

Proxy Statement

The Board of Directors of First Data Corporation is furnishing this Proxy Statement and the accompanying form of proxy in connection with the solicitation of proxies for the 2017 Annual Meeting of Shareholders. The Annual Meeting will be held on April 25, 2017, beginning at 8:00 a.m. Eastern Time, at The Park Lane Hotel, 36 Central Park South, New York, New York 10019.

Important Notice Regarding the Availability of Proxy Materials for the

2017 Annual Meeting of Shareholders to be held on April 25, 2017

The Notice of 2017 Annual Meeting of Shareholders and Proxy Statement, our proxy card, our Annual Report on Form 10-K and other annual meeting materials are available free of charge on the Internet at www.proxyvote.com. We intend to begin mailing our Notice of Internet Availability of Proxy Materials to shareholders on or about March 15, 2017. At that time, we also will begin mailing paper copies of our proxy materials to shareholders who requested them.

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Questions and Answers About the Annual Meeting

     2  

Proposal 1 – Election of Directors

     7  

Proposal 2 – Ratification of Selection of Auditors

     8  

Directors

     10  

Board Governance

     13  

Board Committees

     16  

Director Compensation

     18  

Executive Officers

     20  

Related Transactions

     23  

Share Ownership

     24  

Compensation Discussion and Analysis

     27  

Governance, Compensation and Nominations Committee Report

     36  

Equity Compensation Plan Information

     50  

Audit Committee Report

     51  

Other Matters

     52  

Annual Report

  

Communications with the Board

  

Submission of Shareholder Proposals

  

Delivery of Proxy Materials to Households

  

 

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Questions and Answers About the Annual Meeting

 

Q: Why did I receive these materials?

 

A: We are making this Proxy Statement available to you on or around March 15, 2017 because the Board is soliciting your proxy to vote at the 2017 Annual Meeting of Shareholders on April 25, 2017. The information provided in this Proxy Statement is for your use in deciding how to vote on the proposals described below.

 

Q: Who is entitled to attend and vote at the Annual Meeting?

 

A: You can attend and vote at the Annual Meeting if, as of the close of business on February 27, 2017 (Record Date), you were a shareholder of record of First Data’s Class A common stock or Class B common stock. As of the Record Date, there were 373,704,307 shares of our Class A common stock and 543,993,379 shares of our Class B common stock outstanding.

 

Q: What are the voting rights of each class of stock?

 

A: For each proposal, shareholders are entitled to cast one vote for each share of Class A common stock held as of the Record Date and 10 votes for each share of Class B common stock held as of the Record Date. There are no cumulative voting rights.

 

Q: How do I gain admission to the Annual Meeting?

 

A: If you are a registered shareholder, you must bring with you the Notice of Internet Availability of Proxy Materials and a government-issued photo identification (such as a valid driver’s license or passport) or an employee badge issued by First Data to gain admission to the Annual Meeting. If you did not receive a Notice of Internet Availability of Proxy Materials, please call our Investor Relations Department at (212) 266-3565 to request admission to the meeting.

If you hold your shares in street name and want to attend the Annual Meeting, you must bring your government-issued photo identification or an employee badge issued by First Data, together with:

 

    The Notice of Internet Availability of Proxy Materials you received from your broker, bank or other holder of record; or
    A letter from your broker, bank or other holder of record indicating that you were the beneficial owner of First Data stock as of the Record Date; or
    Your most recent account statement indicating that you were the beneficial owner of First Data stock as of the Record Date.

All packages and bags are subject to inspection.

 

Q: What is the difference between a registered shareholder and a shareholder who owns stock in street name?

 

A: If you hold shares of Class A common stock or Class B common stock directly in your name, you are a registered shareholder. If you own your First Data shares indirectly through a broker, bank or other holder of record, those shares are held in street name.

 

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Q: Can I vote my shares before the Annual Meeting?

 

A: Yes. If you are a registered shareholder, there are three ways to vote your shares before the Annual Meeting:

 

    By Internet (www.proxyvote.com) – Use the Internet to transmit your voting instructions until 11:59 p.m. ET on April 23, 2017. Have your Notice of Internet Availability of Proxy Materials or proxy card available and follow the instructions on the website to vote your shares.
    By telephone (1-800-690-6903) – Submit your vote by telephone until 11:59 p.m. ET on April 23, 2017. Have your Notice of Internet Availability of Proxy Materials or proxy card available and follow the instructions provided by the recorded message to vote your shares.
    By mail – If you received a paper copy of the proxy materials, you can vote by mail by filling out the proxy card enclosed with those materials and returning it using the instructions on the card. To be valid, proxy cards must be received before the start of the Annual Meeting.

If your shares are held in street name, your broker, bank or other holder of record may provide you with a Notice of Internet Availability of Proxy Materials that contains instructions on how to access our proxy materials and vote online or to request a paper or email copy of our proxy materials. If you received these materials in paper form, the materials included a voting instruction card so you can instruct your broker, bank or other holder of record how to vote your shares.

Please see the Notice of Internet Availability of Proxy Materials or the information your bank, broker or other holder of record provided you for more information on these voting options.

 

Q: Can I vote in person at the Annual Meeting instead of by proxy?

 

A: If you are a registered shareholder, you can vote at the Annual Meeting any shares that were registered in your name as the shareholder of record as of the Record Date.

If your shares are held in street name, you cannot vote those shares at the Annual Meeting unless you have a legal proxy from the holder of record. If you plan to attend and vote your street-name shares at the Annual Meeting, you should request a legal proxy from your broker, bank or other holder of record and bring it with you to the Annual Meeting.

Whether or not you plan to attend the Annual Meeting, we strongly encourage you to vote your shares by proxy before the Annual Meeting.

 

Q: Can I revoke my proxy or change my voting instructions once submitted?

 

A: If you are a registered shareholder, you can revoke your proxy and change your vote before the Annual Meeting by:

 

    Sending a written notice of revocation to our executive offices to the attention of our Corporate Secretary (the notification must be received by 11:59 p.m. ET on April 23, 2017). The notice should be addressed as follows:

First Data Corporation

225 Liberty Street, 29th Floor

New York, New York 10281

Attn: Corporate Secretary

 

    Voting again by Internet or telephone before 11:59 p.m. ET on April 23, 2017 (only the latest vote you submit will be counted); or

 

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    Submitting a new properly signed and dated paper proxy card with a later date (your proxy card must be received before the start of the Annual Meeting).

If your shares are held in street name, you should contact your broker, bank or other holder of record about revoking your voting instructions and changing your vote before the Annual Meeting.

If you are eligible to vote at the Annual Meeting, you also can revoke your proxy or voting instructions and change your vote at the Annual Meeting by submitting a written ballot before the polls close.

 

Q: What will happen if I submit my proxy but do not vote on a proposal?

 

A: If you submit a valid proxy but fail to provide instructions on how you want your shares to be voted, properly submitted proxies will be voted:

 

    “FOR” the election of all director nominees;
    “FOR” the ratification of the appointment of Ernst & Young LLP as First Data’s independent registered public accounting firm.

If any other item is properly presented for a vote at the meeting, the shares represented by your properly submitted proxy will be voted at the discretion of the proxies.

 

Q: What will happen if I neither submit my proxy nor vote my shares in person at the Annual Meeting?

 

A: If you are a registered shareholder, your shares will not be voted.

If your shares are held in street name, your broker, bank or other holder of record may vote your shares on certain “routine” matters. The ratification of independent auditors is currently considered to be a routine matter. On this matter, your broker, bank or other holder of record can:

 

    Vote your street-name shares even though you have not provided voting instructions; or
    Choose not to vote your shares.

The other matters you are being asked to vote on are not routine and cannot be voted by your broker, bank or other holder of record without your instructions. When a broker, bank or other holder of record is unable to vote shares for this reason, it is called a “broker non-vote.”

 

Q: What does it mean if I receive more than one set of materials?

 

A: You probably have multiple accounts with us and/or brokers, banks, or other holders of record. You should vote all of the shares represented by the notices/proxy cards. Certain brokers, banks, and other holders of record have procedures in place to discontinue duplicate mailings upon a shareholder’s request. You should contact your broker, bank or other holder of record for more information.

 

Q: How many shares must be present to conduct business at the Annual Meeting?

 

A: To carry on the business of the Annual Meeting, holders of a majority of the voting power of Class A common stock and Class B common stock issued and outstanding as of the Record Date must be present in person or represented by proxy.

 

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Q: What vote is required to approve each proposal?

 

A: For Proposal No. 1, directors will be elected by a plurality of the votes of the shares of our Class A common stock and Class B common stock (voting together as a single class) present in person or represented by proxy at the Annual Meeting and entitled to vote on the election of directors, which means that the two nominees receiving the highest number of affirmative votes will be elected.

Proposal No. 2, the ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2017, will be determined by the affirmative vote of a majority of the voting power of the shares of our Class A common stock and Class B common stock (voting together as a single class) present in person or represented by proxy at the Annual Meeting.

 

Q: Are abstentions and broker non-votes counted in the vote totals?

 

A: A broker non-vote occurs when shares held by a broker are not voted with respect to a particular proposal because the broker does not have discretionary authority to vote on the matter and has not received voting instructions from its clients. If your broker holds your shares in its name and you do not instruct your broker how to vote, your broker will only have discretion to vote your shares on “routine” matters. Where a proposal is not “routine,” a broker who has received no instructions from its clients does not have discretion to vote its clients’ uninstructed shares on that proposal. At our Annual Meeting, only Proposal No. 2 (ratifying the appointment of our independent registered public accounting firm) is considered a routine matter. Your broker will therefore not have discretion to vote on the election of directors as it is a “non-routine” matter.

Broker non-votes and abstentions by stockholders from voting (including brokers holding their clients’ shares of record who cause abstentions to be recorded) will be counted towards determining whether or not a quorum is present. However, as the two nominees receiving the highest number of affirmative votes will be elected, abstentions and broker non-votes will not affect the outcome of the election of Directors. With regard to the affirmative vote of the shares present at the meeting required for Proposal 2, it is a routine matter so there will be no broker non-votes but abstentions will have the effect of a negative vote.

 

Q: How are votes counted?

 

A: In the election of directors, Proposal No. 1, you may vote “FOR” all or some of the nominees or your vote may be “WITHHELD” with respect to one or more of the nominees.

For Proposal No. 2, you may vote “FOR,” “AGAINST,” or “ABSTAIN.” If you elect to “ABSTAIN,” the abstention has the same effect as a vote “AGAINST.”

If you provide specific instructions with regard to certain items, your shares will be voted as you instruct on such items. If no instructions are indicated on a properly executed proxy card or over the telephone or Internet, the shares will be voted as recommended by our board of directors.

 

Q: Is my vote confidential?

 

A:

Yes. The vote of any shareholder will not be revealed to anyone other than a tabulator of votes or an election inspector, except (i) as necessary to meet applicable legal and stock exchange listing requirements, (ii) to assert claims for or defend claims against First Data, (iii) to allow the Inspectors of Election to certify the results of the shareholder vote, (iv) in the event a proxy solicitation in opposition to First Data or the election of the Board takes place, (v) if a shareholder has requested that their vote be

 

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disclosed, or (vi) to respond to shareholders who have written comments on Proxy Cards.

 

Q: Will any other business be transacted at the meeting? If so, how will my proxy be voted?

 

A: Management does not know of any business to be transacted at the Annual Meeting other than those matters described in this Proxy Statement. The period specified in First Data’s By-Laws for submitting additional proposals to be considered at the meeting has passed and there are no such proposals to be considered. However, should any other matters properly come before the meeting, and any adjournments and postponements, shares with respect to which voting authority has been granted to the proxies will be voted by the proxies in accordance with their judgment.

 

Q: Who will pay the cost of soliciting votes for the Annual Meeting?

 

A: We will bear the entire cost of solicitation of proxies, including the preparation, assembly, printing, and mailing of this Proxy Statement and the accompanying materials. We have engaged the firm of Morrow Sodali to assist in distributing and soliciting proxies for a fee of $6,500 plus expenses. However, the proxy solicitor fee is only a small fraction of the total cost of the proxy process. The largest expense in the proxy process is printing and mailing the proxy materials. Proxies also may be solicited on behalf of First Data by directors, officers or employees of First Data in person or by mail, telephone or facsimile transmission. No additional compensation will be paid to such directors, officers, or employees for soliciting proxies.

 

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Proposal 1 – Election of Directors

Our Board of Directors is divided into three classes serving staggered three-year terms. The terms of office of two current directors, Mr. Nuttall and Mr. Plumeri, expire at the 2017 Annual Meeting of Shareholders. Mr. Forehand has decided not to seek re-election and his term will expire at the 2017 Annual Meeting. The Board of Directors has approved a reduction in the size of the Board to eight members effective as of the 2017 Annual Meeting. Mr. Nuttall and Mr. Plumeri have been nominated for re-election through the 2020 Annual Meeting of Shareholders or until a successor is elected and qualified. The nominees were recommended to the Board by the Governance, Compensation and Nominations Committee. In making its recommendation, the Committee considered the experience, qualifications, attributes, and skills of each nominee. All nominees have indicated their willingness to serve if elected.

You have the opportunity to vote on the election of Mr. Nuttall and Mr. Plumeri. Additional information regarding each director nominee’s experience, skills, and qualifications to serve as a member of our Board can be found beginning on page 10.

 

Name    Age    Director
Since
   Summary Background    Independent    Committee
Memberships
Scott C. Nuttall    44    2007    Member of Kohlberg Kravis Roberts & Co. L.P.    No    Governance, Compensation and Nominations
Joseph J. Plumeri    73    2013    Vice Chairman of First Data Board, Former CEO of Willis Group Holdings plc    No    Governance, Compensation and Nominations

The terms of Mr. Olson, Mr. Nevels, and Ms. Yastine expire at the 2018 Annual Meeting of Shareholders. The terms of Mr. Bisignano, Mr. Kravis, and Ms. Miller expire at the 2019 Annual Meeting of Shareholders.

If unforeseen circumstances (such as death or disability) make it necessary for the Board to substitute another person for any of the nominees, the proxies have the authority to vote your shares for that other person.

The Board of Directors recommends that you vote to RE-ELECT Mr. Nuttall and Mr. Plumeri as directors.

 

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Proposal 2 – Ratification of Selection of Auditors

The Board of Directors recommends to the shareholders the ratification of the selection of Ernst & Young LLP, independent registered public accounting firm, to audit the accounts of First Data and its subsidiaries for 2017. Ernst & Young LLP has served as the independent registered public accounting firm for First Data or its predecessor entities since 1980. Consistent with regulations adopted under the Sarbanes-Oxley Act of 2002, the lead audit partner having primary responsibility for the audit and the concurring audit partner are rotated every five years.

A representative of Ernst & Young LLP will be present at the meeting, will have the opportunity to make a statement, and will be available to respond to appropriate questions.

Audit Fees and All Other Fees

The following table shows the fees for audit and other services provided by Ernst & Young LLP for 2016 and 2015:

 

(in millions)            2016                      2015                

Audit Fees

     $7.7        $10.6      

Audit-Related Fees

     4.3        3.1      

Tax Fees

     0.8        1.0      

Audit Fees

This category includes fees related to the audit of our annual consolidated financial statements; the review of our quarterly consolidated financial statements; comfort letters, consents, and assistance with and review of documents filed with the SEC; offering memoranda, purchase accounting and other accounting, and financial reporting consultation; statutory audits required domestically and internationally; and research work billed as audit fees or necessary to comply with the standards of the Public Company Accounting Oversight Board (United States).

Audit-Related Fees

This category consists of fees for audit-related services that are reasonable related to the performance of the audit or review of our consolidated financial statements. Audit-related fees primarily include fees related to service auditor examinations, due diligence related to mergers and acquisitions, attest services that are not required by statute or regulation, and consultation concerning financial accounting and reporting standards not classified as audit fees.

Tax Fees

This category consists of fees for tax compliance, tax advice and tax planning services.

All Other Fees

This category consists of fees for services that are not included in the above categories. We did not pay Ernst & Young LLP any other fees for services that are not included in the categories above.

 

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Audit Committee Pre-approval of Service of Independent Registered Public Accounting Firm

Our Audit Committee has established a policy to pre-approve all audit and non-audit services provided by the independent registered public accounting firm. These services may include audit services, audit-related services, tax services, and other services. Under the policy, our Audit Committee reviews and pre-approves services that may be provided by the independent registered public accounting firm. The pre-approval is detailed as to the particular service or category of services and is subject to a specific budget. Once pre-approved, the services and pre-approved amounts are monitored against actual charges incurred and modified if appropriate. The Chairperson of the Committee has the authority to pre-approve such services between meetings of our Audit Committee and such pre-approvals are reported to our Audit Committee at the next regularly scheduled meeting.

During 2016, all audit and non-audit services provided by Ernst & Young LLP were pre-approved by our Audit Committee or, consistent with the pre-approval policy of our Audit Committee, by the Chairperson of our Audit Committee for inter-meeting pre-approvals.

In the event the shareholders fail to ratify the appointment, the Audit Committee will consider it a direction to select other auditors for the subsequent year. Even if the selection is ratified, the Audit Committee, in its discretion, may select a new independent registered public accounting firm at any time during the year if it feels that such a change would be in the best interest of First Data and its shareholders.

The Board of Directors recommends that you vote FOR proposal 2.

 

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Directors

Frank J. Bisignano

Age: 57

Director Since: 2013

Committees: None

Frank J. Bisignano has been Chairman of our Board since March 2014 and Chief Executive Officer and a member of our Board since April 2013. Before joining us, Mr. Bisignano was the Co-Chief Operating Officer for JPMorgan Chase & Co. from July 2012 to April 2013, CEO of Mortgage Banking at JPMorgan Chase & Co. from February 2011 until December 2012, and Chief Administrative Officer of JPMorgan Chase & Co. from 2005 until July 2012. From 2002 to 2005, Mr. Bisignano served as the chief executive officer for Citigroup’s Global Transactions Services business and a member of Citigroup’s Management Committee.

Mr. Bisignano brings many years of executive experience in the financial industry.

Joe W. Forehand

Age: 68

Director Since: 2009

Committees: Governance, Compensation and Nominations

Joe W. Forehand has been a member of our Board since September 2009 and was Chairman of the Board from March 2010 to March 2014. Mr. Forehand has decided not to seek re-election and his term will expire at the 2017 Annual Meeting. He was our interim Chief Executive Officer from March 2010 until October 2010. In his more than 30 years with Accenture Ltd., Mr. Forehand served as the CEO from 1999 until 2004. Before that, as chief executive of the Communications and High Technology Operating Group, and as Chairman of the board of directors of Accenture Ltd. from 2001 until 2006. Mr. Forehand is a Senior Advisor of Kohlberg Kravis Roberts & Co. L.P. (KKR) and has also been involved with KKR’s growth and emphasis on the technology industry sector.

Mr. Forehand brings many years of experience at a publicly held consulting and technology services company, including service as Chairman of our Board.

Henry R. Kravis

Age: 73

Director Since: 2009

Committees: Governance, Compensation and Nominations

Henry R. Kravis has been a member of our Board since September 2009. Mr. Kravis, a pioneer of the private equity industry, co-founded KKR in 1976 and is its Co-Chairman and Co-Chief Executive Officer. He is actively involved in managing KKR and serves on its regional Private Equity Investment and Portfolio Management Committees. In addition to serving on the board of the general partner of KKR, Mr. Kravis currently serves on the board of ICONIQ Capital, LLC. He also serves as a director, chairman emeritus or trustee of several cultural, professional and education institutions, including The Business Council, Claremont McKenna College, Columbia Business School, Mount Sinai Hospital, Partnership for New York City, Partnership Fund for New York City, Sponsors for Educational Opportunity, Rockefeller University, and Tsinghua University School of Economics and Management. He earned a B.A. from Claremont McKenna College in 1967 and a M.B.A. from the Columbia Business School in 1969. Mr. Kravis has more than four

 

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decades of experience financing, analyzing, and investing in public and private companies, as well as serving on the boards of a number of KKR portfolio companies in the past.

Mr. Kravis provides significant experience and expertise in private equity investments, including his involvement in KKR’s diverse investments.

Heidi G. Miller

Age: 63

Independent Director Since: 2014

Committees: Audit, Risk

Heidi G. Miller has been a member of our Board since April 2014. Prior to retiring in 2012, Ms. Miller had been president of JPMorgan International, a division of JPMorgan Chase & Co., since June 2010. She served as Executive Vice President, Chief Executive Officer - Treasury and Securities Services of JPMorgan Chase & Co. from January 2004 to June 2010. From 2002 to 2004, Ms. Miller served as Executive Vice President and Chief Financial Officer of Bank One Corporation. Previously, she had been Chief Financial Officer of Citigroup Inc. She is a director of General Mills Inc. and HSBC Holdings plc. and Chairman of HSBC North America Holdings Inc. (HNAH), a wholly owned subsidiary of HSBC Holdings, and previously served as a director of Progressive Casualty Insurance Company. Ms. Miller graduated from Princeton University with a bachelor’s degree in history and completed her doctorate in Latin American History at Yale University.

Ms. Miller brings executive experience in the financial services industry and her service as a director of a publicly held company.

James E. Nevels

Age: 65

Independent Director Since: 2014

Committees: Audit, Risk

James E. Nevels has been a member of our Board since November 2014. Mr. Nevels is Chairman of The Swarthmore Group, an investment advisory firm that he founded in 1991. He is also Lead Independent Director of The Hershey Company, Lead Independent Director of WestRock Company, and director of Alcoa Corporation. In 2004, Mr. Nevels was appointed by the President of the United States to a three-year term on the advisory committee to the Pension Benefit Guaranty Corporation, where he served as Chairman from 2005 to 2007. In 2001, he was appointed by the Governor of Pennsylvania as Chairman of the Philadelphia School Reform Commission overseeing the turnaround of the Philadelphia School System, at that time the ninth-largest school district in the United States. Mr. Nevels was a member of the board of directors of the Federal Reserve Bank of Philadelphia from January 2010 until December 2015, and served as its Deputy Chairman from January 2012 until his appointment as Chairman in January 2014. Mr. Nevels was formerly a director of Tasty Baking Company from May 2005 to May 2011. He holds a bachelor’s degree, cum laude and Phi Beta Kappa, in political science and philosophy from Bucknell University, a Masters of Business Administration degree from the Wharton School of the University of Pennsylvania and a Juris Doctor degree from the University of Pennsylvania Law School.

Mr. Nevels provides expertise in the securities and investment industry with decades of experience in finance, law and corporate governance.

 

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Scott C. Nuttall

Age: 44

Director Since: 2007

Committees: Governance, Compensation and Nominations

Scott C. Nuttall has been a member of our Board since September 2007 and is a Member of KKR. Mr. Nuttall joined KKR in 1996 and is head of KKR’s Global Capital and Asset Management Group, which includes Credit, Hedge Funds, KKR Capital Markets and KKR’s Client and Partner Group. He has played a significant role in several of KKR’s private equity investments. Before joining KKR, he was with the Blackstone Group where he was involved in numerous merchant banking and merger and acquisition transactions. He received a B.S., summa cum laude, from the University of Pennsylvania.

Mr. Nuttall brings a broad perspective brought by his involvement in KKR’s diverse investments and his extensive knowledge of our business and capital structure through his involvement with First Data since our 2007 acquisition by KKR.

Tagar C. Olson

Age: 39

Director Since: 2007

Committees: None

Tagar C. Olson has been a member of our Board since September 2007. Mr. Olson joined KKR in 2002 and is a Member and Head of KKR’s Financial Services industry team and on the Investment Committee within KKR’s Americas Private Equity platform. Mr. Olson is on the board of directors of Alliant Insurance Services, PURE, Sedgwick, and WMIH Corp. He has been involved in many of KKR’s investments in the financial services sector, including Latitude Financial, Legg Mason, Nephila, and Santander Consumer USA. Before joining KKR, Mr. Olson was with Evercore Partners Inc., where he was involved in a number of private equity transactions and mergers and acquisitions. He holds a B.S. and B.A.S., summa cum laude, from the University of Pennsylvania. Mr. Olson is a member of the Board of Overseers at NYU Langone Medical Center.

Mr. Olson provides expertise in the financial services industry and extensive knowledge of our business and capital structure through his involvement with First Data since our 2007 acquisition by KKR.

Joseph J. Plumeri

Age: 73

Director Since: 2013

Committees: Governance, Compensation and Nominations

Joseph J. Plumeri has been a member of our Board and a Senior Advisor of KKR since August 2013 and our Vice Chairman since May 2014. Mr. Plumeri was also our Head of Client Delivery, Innovation and Marketing from June 2014 until June 2015. Before joining us, Mr. Plumeri was Chief Executive Officer of Willis Group Holdings plc from October 2000 to January 2013 and Chairman of its board of directors from 2001 to July 2013. Before joining the Willis Group, Mr. Plumeri spent 32 years as an executive with Citigroup Inc. and its predecessors, where his responsibilities included overseeing the 450 North American retail branches of Citigroup’s Citibank unit. Before that, Mr. Plumeri served as Chairman and Chief Executive Officer of Citigroup’s Primerica Financial Services from 1995 to 1999. In 1994, Mr. Plumeri was appointed Vice Chairman of Citigroup’s predecessor, Travelers Group Inc. In 1993, Mr. Plumeri became the President of a predecessor of Citigroup’s Salomon Smith Barney unit after overseeing the merger of Smith Barney and

 

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Shearson and serving as the President and Managing Partner of Shearson since 1990. He also serves on the boards of the National Center on Addiction and Substance Abuse; Mount Sinai Medical Center; the Intrepid Sea, Air & Space Museum; the Jackie Robinson Foundation and the Churchill Centre and Museum at the Cabinet War Rooms in London.

Mr. Plumeri brings many years of experience as chief executive officer and chairman of the board of a publicly held company.

Barbara A. Yastine

Age: 57

Director Since: 2016

Committees: Audit

Barbara A. Yastine has been a member of our Board since September 2016. She served as a director and Co-Chief Executive Officer of Lebenthal Holdings, LLC from September 2015 to June 2016. Ms. Yastine previously served as Chair, President, and Chief Executive Officer of Ally Bank from March 2012 to September 2015, and as Chief Administrative Officer of Ally Financial, overseeing the risk, compliance, legal and technology areas, and Chair of Ally Bank, from May 2010 to March 2012. Prior to joining Ally Financial, she served as a Principal of Southgate Alternative Investments, a start-up diversified alternative asset manager, beginning in June 2007. She served as Chief Financial Officer for investment bank Credit Suisse First Boston from October 2002 to August 2004. From 1987 through 2002, Ms. Yastine worked at Citigroup and its predecessor companies. Ms. Yastine also is a member of the Board of Directors of Primerica, Inc. She received a B.A. in Journalism and an M.B.A. from New York University.

Ms. Yastine brings expertise in general management, risk and asset management, finance and strategic planning from her experience serving in senior management positions in the investment banking and capital markets industries.

Board Governance

Board Leadership Structure

Our governance framework provides the Board with flexibility to select the appropriate leadership structure. In making leadership structure determinations, the Board considers many factors, including the specific needs of the business and what is in the best interests of the our shareholders. The current leadership structure is comprised of a combined Chairperson of the Board and Chief Executive Officer, a Lead Director, and three Board committees. The directors believe that the positions of Chairperson and CEO currently should be held by the same person, as this combination has served us well by providing unified leadership and direction for the Board.

If the individual elected as Chairperson is also an employee of First Data, the Board believes that a Lead Director should be appointed to help ensure robust leadership on the Board. Accordingly, the non-management directors have elected Scott Nuttall as Lead Director. As Lead Director, Mr. Nuttall assists in optimizing the effectiveness of the Board by performing the duties described below and such other duties as determined by the Board or non-management directors:

 

    Presides at all meetings of the directors and any Board meeting when the Chairperson and the CEO are not present, including meetings or executive sessions of the non-management directors;
    Calls meetings of the non-management directors, as appropriate;

 

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    Provides feedback from executive sessions of the non-management directors to the Chairperson, CEO, and members of senior management, as appropriate;
    Serves as a liaison and facilitator between the non-management directors and the Chairperson and the CEO, as appropriate;
    Before the Board meetings, advises the Chairperson and CEO regarding the information to be provided to directors, including the quality, quantity, and timeliness of such information;
    Advises the Chairperson and CEO regarding Board meeting agenda items and the Board’s calendar, including the number and frequency of Board meetings, to ensure that there is sufficient time for discussion of all agenda items. The Lead Director (and any director) may request inclusion of additional agenda items;
    Consults with the Chairperson and the Governance, Compensation and Nominations Committee on the appointment of chairs and members for board committees;
    Collaborates with such Committee on the evaluation of the CEO;
    Collaborates with such Committee on matters related to Board effectiveness and independence including the performance and structure of the Board and its committees, and the performance of individual directors; and
    Together with the Chairperson, recommends to the Board and the Board committees the retention of advisers and consultants who report directly to the Board.

Board Role in Risk Oversight

Our Board has extensive involvement in the oversight of risk management related to us and our business and accomplishes this oversight through the regular reporting by the Audit Committee and the Risk Committee. The Risk Committee represents the Board by overseeing our risk governance structure, risk assessment, and risk management practices, and making recommendations to the Board regarding our willingness to accept risks and strategies related to key risks. The Audit Committee represents the Board by periodically reviewing our accounting, reporting, and financial practices, including the integrity of our consolidated financial statements, the surveillance of administrative and financial controls and our compliance with legal and regulatory requirements. Through its regular meetings with management, including the finance, legal, and internal audit functions, the Audit Committee reviews and discusses all significant areas of our business and summarizes for the Board all areas of financial risk and the appropriate mitigating factors. In addition, our Board receives periodic detailed operating performance reviews from management.

Our executive officers regularly report to the Board, including the non-management directors, and the Audit, the Governance, Compensation and Nominations, and the Risk Committees to ensure effective and efficient oversight of our activities and to assist in proper risk management and the ongoing evaluation of management controls. The Head of Internal Audit reports administratively to our Chief Control Officer and directly to the Audit Committee. We believe that the leadership structure of our Board provides appropriate risk oversight of our activities given the controlling interest held by KKR.

Controlled Company Exception

Kohlberg Kravis Roberts & Co. L.P. and its affiliates control a majority of the voting power of our outstanding common stock. As a result, we are a “controlled company” within the meaning of the corporate governance standards of the New York Stock Exchange. Under these rules, if more than 50% of the voting power of a company is held by an individual, group or another entity, the company is a “controlled company” and may elect not to comply with certain corporate governance requirements, including:

 

    the requirement that a majority of the Board consist of “independent directors” as defined under the rules of the NYSE;
    the requirement that we have a compensation committee that is composed entirely of independent

 

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     directors with a written charter addressing the committee’s purpose and responsibilities; and

    the requirement that we have a nominating and corporate governance committee that is composed entirely of independent directors.

As a result, we do not have a majority of independent directors on our Board and we do not have a nominating and corporate governance committee or a compensation committee that is composed entirely of independent directors. In the event that we cease to be a “controlled company,” we will comply with these provisions within the transition periods specified in the corporate governance rules of the NYSE.

Meetings of the Board and Director Attendance at Annual Meeting

Our Board held 7 meetings in 2016. Each director attended at least 90% of all of the meetings of the Board and committees of the Board on which he or she served in 2016.

Periodically at the end of Board meetings our Lead Director presides at an executive session without any management directors present. These sessions allow the directors to discuss important issues, including the business and affairs of First Data as well as matters concerning management, without any member of management present. In addition, an executive session including only independent directors is held at least once a year. Ms. Miller, as Chairperson of the Risk Committee, presides at such executive sessions. Members of the Audit Committee, Governance, Compensation and Nominations Committee, and Risk Committee also meet in executive session as needed.

Directors are expected to attend our annual meetings of shareholders absent extraordinary circumstances, and all directors except one attended the 2016 Annual Meeting of Shareholders.

Director Nominations

Our Board is responsible for nominating directors for election by the shareholders and filling any new positions or vacancies on the Board that may occur. The Governance, Compensation and Nominations Committee is responsible for identifying, screening, and recommending candidates to the Board for Board membership. Shareholders may also propose nominees for consideration by the Committee by writing to First Data Secretary, c/o General Counsel Office, First Data Corporation, 225 Liberty Street, 29th Floor, New York, New York 10281.

Nominees for director are selected on the basis of experience, integrity, skills, diversity, independence, ability to make independent analytical inquiries, understanding of First Data’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. The Board believes that its membership should reflect a diversity of experience, gender, race, ethnicity, and age. In formulating its recommendations, the Governance, Compensation and Nominations Committee will consider recommendations offered by any shareholder, director, or officer of First Data.

Director Independence

Each year our Board determines which of our directors are independent. Under our Corporate Governance Guidelines, to be considered “independent” a director (1) must meet the independence standards under the NYSE listing standards; and (2) the Board must affirmatively determine that the director otherwise has no material relationship with First Data directly, or as an officer, shareholder, or partner of an organization that has a relationship with First Data. In making its independence determinations, the Board reviews any material direct and indirect relationships between each director and First Data, as well as the compensation and other payments each director received from or made to First Data. Our Board has determined that Ms. Miller, Mr. Nevels, and Ms. Yastine are independent directors. For Ms. Miller, our Board considered her son’s

 

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employment with First Data in a non-officer and non-strategic position. Given his position in the company and amount of compensation, the Board determined that his employment did not create a material relationship with First Data that would impair Ms. Miller’s independence.

Corporate Governance Guidelines

Our Board has adopted Corporate Governance Guidelines that, along with the charters of the Board committees, provide the basic framework for the Board’s operation and role in the governance of First Data. You can find our Corporate Governance Guidelines on our website at www.firstdata.com under “Investors” and “Corporate Governance.”

Code of Ethics

We have adopted an Employee Code of Conduct, which applies to all employees, a Code of Ethics for Senior Financial Officers, which applies to our Chief Executive Officer, Chief Financial Officer, and Principal Accounting Officer, and a Directors’ Code of Ethics, which applies to our directors. These Codes can be viewed on our website at www.firstdata.com under “Investors” and “Corporate Governance.” On the same website, we will post amendments to a provision of such codes and waivers from the Code of Ethics for Senior Financial Officers.

 

Board Committees

Our Board has an Audit Committee, a Governance, Compensation and Nominations Committee, and a Risk Committee. Information about each committee is provided below.

Audit Committee

Members: Heidi G. Miller, James E. Nevels, and Barbara A. Yastine (Chairperson). Ms. Yastine replaced Mr. Olson on September 21, 2016.

Meetings Held in 2016: 9

Primary Responsibilities:

The Audit Committee assists the Board in fulfilling its oversight responsibilities with respect to: (1) the integrity of First Data’s financial statements, (2) First Data’s compliance with legal and regulatory requirements, (3) the qualifications, performance and independence of First Data’s independent registered public accounting firm, and (4) the performance of First Data’s internal auditing department.

Independence:

Ms. Miller, Mr. Nevels, and Ms. Yastine meet the independence requirements of the NYSE, the Securities Exchange Act of 1934, and our Corporate Governance Guidelines.

Financial Experts:

Our Board has unanimously determined that all Audit Committee members are financially literate under the NYSE listing standards and all members qualify as “audit committee financial experts” within the meaning of SEC regulations and have accounting or related financial management expertise as required by the NYSE listing standards.

 

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General Information:

The Audit Committee Charter can be viewed on our website at www.firstdata.com under “Investors” and “Corporate Governance.”

The Audit Committee Charter prohibits any member of the Audit Committee from serving 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 the director to effectively serve on the Committee

The Audit Committee report begins on page 51.

Governance, Compensation and Nominations Committee

Members: Joe W. Forehand, Henry R. Kravis, Scott C. Nuttall (Chairperson), and Joseph J. Plumeri. Mr. Plumeri joined the Committee on May 11, 2016.

Meetings Held in 2016: 6

Primary Responsibilities:

The Governance, Compensation and Nominations Committee: (1) oversees First Data’s compensation and benefits plans generally, (2) evaluates and sets compensation for our CEO and other members of the management committee, (3) produces the annual report on executive compensation included in this Proxy Statement, (4) identifies individuals qualified to become members of the Board and recommend to the Board nominees for election as directors at each annual meeting of shareholders and to fill vacancies or newly created directorships on the Board that may occur between such meetings, (5) recommends to the Board directors for appointment to Board committees, (6) evaluates and recommends compensation for our directors, (7) develops and recommends to the Board corporate governance guidelines, and (8) oversees the evaluation of the Board and its committees and management.

Independence:

At this time, there are no independent directors on the Governance, Compensation and Nominations Committee. When First Data is no longer is a controlled company within the meaning of the NYSE listing standards, all of the Committee’s members will be “independent” as defined under the NYSE listing standards within the time period permitted for such a transition by the NYSE listing standards.

General Information:

The Governance, Compensation and Nominations Committee Charter can be viewed on our website at www.firstdata.com under “Investors” and “Corporate Governance.”

The Governance, Compensation and Nominations Committee report begins on page 36.

Risk Committee

Members: Heidi G. Miller (Chairperson) and James E. Nevels

Meetings Held in 2016: 5

 

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Primary Responsibilities:

The Risk Committee oversees the management of risks to First Data. The Risk Committee oversees risk governance structure, risk assessment, and risk management practices. It oversees and makes recommendations to the Board regarding First Data’s willingness to accept risks and strategies related to key risks. The Risk Committee also oversees the appointment and, if necessary, replacement of First Data’s Chief Control Officer.

General Information:

The Risk Committee Charter can be viewed on our website at www.firstdata.com under “Investors” and “Corporate Governance.”

Compensation Committee Interlocks and Insider Participation

None of our Governance, Compensation and Nominations Committee members has been one of our executive officers or employees at any time, except for Joseph J. Plumeri who was an employee of First Data until March 31, 2016 and Joe W. Forehand who served as interim Chief Executive Officer during 2010. None of our executive officers currently serves, or has served during the last completed fiscal year, on the compensation committee or board of directors of any other entity that has one or more executive officers serving as a member of our Board or Committee. We are parties to certain transactions with KKR described in the “Certain Relationship and Related Transactions” beginning on page 24.

 

Director Compensation for Fiscal 2016

The following table summarizes compensation for our directors for fiscal year 2016.

 

Name (1)

 

  

Fees

Earned or  

Paid in

Cash  
($)(2)

   Stock
Awards
  ($)(3)(4)  
   Option
  Awards  
($)(5)
   Non-Equity
  Incentive Plan  
Compensation
($)
  

Change in
  Pension Value  
and Non-

Qualified
Deferred
Compensation
Earnings ($)

   All Other
  Compensation  
($)
   Total ($)

Joe W. Forehand

   75,000    125,000    0    0    0    0    200,000

Henry R. Kravis

   40,000    0    0    0    0    0    40,000

Scott C. Nuttall

   40,000    0    0    0    0    0    40,000

Tagar C. Olson

   40,000    0    0    0    0    0    40,000

Heidi Miller

   75,000    125,000    0    0    0    0    200,000

James Nevels

   75,000    125,000    0    0    0    0    200,000

Barbara A. Yastine (6)

   37,500    125,000    923,735    0    0    0      1,086,235  

 

  (1) During 2016, Messrs. Bisignano and Plumeri were salaried employees of First Data and did not receive separate compensation for their services on the Board of Directors. Effective January 1, 2017, Mr. Plumeri receives compensation as a First Data director and has no employment affiliation with First Data.

 

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  (2) Messrs. Kravis, Nuttall, Olson and Ms. Miller elected to defer their annual cash retainer earned in 2016. The deferred cash tracks the performance of shares of First Data. At the time of distribution, the cash payments will include any earnings (or losses) based on the change in price of First Data shares during the deferral period.
  (3) Amounts reported reflect the grant date fair value computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 for the 9,984 shares of restricted stock granted to Messrs. Forehand and Nevels and Ms. Miller and 9,398 shares of restricted stock granted to Ms. Yastine.
  (4) The directors in the table above held the following aggregate number of shares of restricted stock at year end: Mr. Forehand held 26,900 shares of restricted stock, Ms. Miller held 26,900 shares of restricted stock, Mr. Nevels held 26,900 shares of restricted stock, and Ms. Yastine held 9,398 shares of restricted stock.
  (5) The directors in the table above held the following number of shares subject to options at year end: Mr. Forehand held 1,044,001 options, Ms. Miller held 158,182 options, Mr. Nevels held 158,182 options, and Ms. Yastine held 158,182 options.
  (6) On September 21, 2016, the date of her appointment to the Board of Directors, Ms. Yastine received a one-time grant of 158,182 options to purchase shares of Class A common stock of First Data under the 2015 Omnibus Incentive Plan with a strike price equal to $13.30, the fair market value at the time of grant, to vest in equal annual installments on the first three anniversaries of the grant date.

Description of Director Compensation

Each non-employee director associated with KKR receive an annual cash retainer of $40,000, payable in semi-annual installments.

Each director not employed by us or KKR receive the following:

 

    At the time of their appointment, a one-time grant of 158,182 options to purchase shares of Class A common stock of First Data under the 2015 Omnibus Incentive Plan, with a strike price equal to the fair market value at the time of grant to vest in equal annual installments on the first three anniversaries of the grant date.
    An annual grant of restricted stock equivalent in value to $125,000, both at the time of their appointment and in connection with each First Data Annual Shareholder Meeting at which they continue to serve under the 2015 Omnibus Incentive Plan on the following terms:
  20% vesting one year from the grant date;
  40% vesting two years from the grant date;
  40% vesting three years from the grant date;
  Forfeiture of unvested awards upon termination of Board service for any reason other than Death or Disability; and
  In the event of Death or Disability, all shares shall vest immediately.
    Annual cash retainer of $75,000 to be paid in quarterly installments on the first day of each calendar quarter.

All cash compensation may be deferred under the Director Deferred Comp Plan based upon the election made prior to each calendar year by each director. All amounts deferred will accrue earnings based on the performance of our Class A common stock and be paid to the director upon termination of the director’s service, subject to acceleration of the payout under certain circumstances.

In connection with Mr. Forehand’s decision not to run for reelection as a director, his existing equity awards were modified so that following his last day of service as a Director:

 

    his existing restricted stock grants will continue to vest under their existing vesting schedule, and
    his existing stock option can be exercised for a period of three years from the last day of his service as a director (but in no event past the original term of the option).                

 

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Executive Officers

The section below provides information regarding our executive officers, other than Frank Bisignano, as of March 1, 2017:

Cynthia A. Armine-Klein

Age: 55

Position: Executive Vice President, Chief Control Officer

Cynthia A. Armine-Klein has been our Executive Vice President, Chief Control Officer since May 2014. Before joining us, Ms. Armine-Klein was Executive Vice President and Chief Compliance Officer for JPMorgan Chase & Co. from July 2012 to May 2014. Before joining JPMorgan Chase & Co., she spent 31 years at Citigroup and its predecessor firms and was Citigroup’s Global Chief Compliance Officer from 2008 until 2012.

Daniel J. Charron

Age: 52

Position: Executive Vice President, Head of Global Business Solutions

Daniel J. Charron has been our Executive Vice President, Head of Global Business Solutions since February 2015. Before joining us, Mr. Charron spent 14 years with Chase Paymentech, the global payment processing business of JPMorgan Chase & Co., most recently as its President from May 2013 until December 2014. From March 2013 to May 2013, Mr. Charron was acting head of Chase Paymentech and before that he served as Executive Vice President, Head of Client Services from November 2008 until March 2013.

Guy Chiarello

Age: 57

Position: President

Guy Chiarello has been our President since July 2013. Before joining us, Mr. Chiarello was the Chief Information Officer of JPMorgan Chase & Co. for the prior five and a half years and served in various technology roles for Morgan Stanley for 23 years before that.

Ivo M. Distelbrink

Age: 47

Position: Executive Vice President, Head of Asia Pacific Region

Ivo M. Distelbrink joined us in August 2016 as Executive Vice President, Head of Asia Pacific (APAC) Region. Before joining us, Mr. Distelbrink was the Managing Director - Region Head, Asia-Pacific & Japan for global transaction services for Bank of America Merrill Lynch from 2010 until July 2016. Previously, Mr. Distelbrink served in a number of roles for CitiBank N.A., most recently as Managing Director – Region Head, Asia Pacific & Japan, Treasury & Trade Solutions, Global Transaction Services.

 

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Christopher Foskett

Age: 59

Position: Executive Vice President, Head of Corporate and Business Development

Christopher Foskett joined us in May 2014 as Head of Global, Strategic & National Accounts and has been our Executive Vice President, Head of Corporate and Business Development since June 2015. Before joining us, Mr. Foskett served as the Managing Director, Head of North American Treasury Services and Global Head of Sales for Treasury Services at JPMorgan Chase Bank from 2011 to April 2014. He was Managing Director, Global Head of Financial Institutions at National Australia Bank from 2009 to 2011. Previously, Mr. Foskett was a Managing Director in Citigroup’s Corporate & Investment Bank leading several global businesses from 1991 to 2008. He was previously employed in the merger department at Goldman Sachs & Co. and had Merrill Lynch & Co. He has been a member of the Board of Directors of Verisk Analytics, Inc. since 1999, where he serves on the Finance Committee, the Compensation Committee, and as Chairman of the Audit Committee.

Andrew Gelb

Age: 46

Position: Executive Vice President, Head of Global Financial Solutions

Andrew Gelb has been our Executive Vice President, Head of Global Financial Solutions since February 2016. He joined us in November 2014 as Executive Vice President and Head of Financial Services and was our Executive Vice President, Co-Head of Global Financial Solutions between June 2015 and February 2016. Previously, Mr. Gelb spent 17 years at Citigroup Inc. and was Managing Director and Head of North America Treasury and Trade Solutions business from June 2012 until July 2014. Previously, Mr. Gelb was Head of Securities & Fund Services for EMEA (Europe, Middle East & Africa) of Citigroup Inc. from June 2008 until June 2012.

Thomas Higgins

Age: 58

Position: Executive Vice President, Chief Administrative Officer

Thomas Higgins joined us in December 2013 and has been our Executive Vice President, Chief Administrative Officer since May 2014. Before joining us, he was the head of Operational Control at JPMorgan Chase & Co. from January 2011 until December 2013. In 2010, Mr. Higgins retired after a 24-year career with the U.S. Government. He worked in the national security and foreign policy areas and was a member of the Senior Executive Service.

Christine E. Larsen

Age: 55

Position: Executive Vice President, Chief Operations Officer

Christine E. Larsen joined us as Executive Vice President, Chief Operations Officer in June 2013. Before joining us, she was Executive Vice President of JPMorgan Chase & Co. since January 2012 responsible for firm-wide process improvement and enterprise program management, with a focus on control and integration efforts. From 2006 to January 2012, she was responsible for various senior operations and technology roles at JPMorgan Chase & Co.

 

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Gustavo Marin

Age: 59

Position: Executive Vice President, Head of Latin America Region

Gustavo Marin joined us as our Executive Vice President, Head of Latin America Region since February 2015. Before joining us, Mr. Marin spent 32 years with Citibank, most recently as Senior Advisor from July 2012 until July 2013. He was CEO of Citibank Argentina, Brazil, Paraguay and Uruguay from 2001 until 2012 and Country and Business Manager of Citibank Peru from 1996 to 1998. Mr. Marin served on the Conselho de Desenvolvimento Economico e Social, the advisory body of the Presidency of the Republic, and as a member of the Board of Directors of the Brazilian Federation of Banks. He also served on the Advisory Board of the Brazilian Futures Exchange and as a member of the International Advisory Board of Thomson Reuters.

Anthony S. Marino

Age: 53

Position: Executive Vice President, Head of Human Resources

Anthony S. Marino joined us in March 2015 as Executive Vice President, Head of Human Resources. Before joining us, Mr. Marino was Executive Vice President and Chief Human Resources Officer for The Guardian Life Insurance Company from September 2014 until February 2015. Previously, he was Chief Human Resources Officer and General Manager at Bank of Tokyo-Mitsubishi UFJ from January 2011 until September 2014. From September 2007 until December 2010, Mr. Marino was Chief Human Resources Officer at Ally Financial.

Barry C. McCarthy

Age: 53

Position: Executive Vice President, Network & Security Solutions

Barry C. McCarthy has been our Executive Vice President, Network & Security Solutions since June 2015. Previously, Mr. McCarthy was Executive Vice President, Head of Consumer and Network Solutions from November 2014 until June 2015 and president of our U.S. Financial Services segment from February 2013 until October 2014. Mr. McCarthy joined us in 2004 and has served in various roles of increasing responsibility including head of the merchant product organization, new technologies and general manager of our Asia-Pacific merchant business. Before joining us, he co-founded MagnaCash, a Silicon Valley-based micropayments company, and held various executive roles at VeriSign, Wells Fargo Bank, and Procter & Gamble.

Michael K. Neborak

Age: 60

Position: Executive Vice President, Head of EMEA Region

Michael K. Neborak has been our Executive Vice President, Head of EMEA Region since January 2016. He joined us in July 2014 as our Executive Vice President, Director of Finance. Previously, Mr. Neborak was Group Chief Financial Officer of Willis Group Holdings plc from July 2010 to June 2014. Mr. Neborak also served as Chief Financial Officer of MSCI Inc. from 2006 to 2010. Earlier in his career, from 1982 to 2006, Mr. Neborak served in roles of increasing responsibility within business units of Citigroup and its predecessor companies. He began his career with Arthur Andersen & Co.

 

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Himanshu A. Patel

Age: 41

Position: Executive Vice President, Chief Financial Officer

Himanshu A. Patel has been our Executive Vice President, Chief Financial Officer since September 2015. Mr. Patel previously was our Executive Vice President, Strategy, Planning and Business Development and served in that role since joining us in June 2013. Before joining us, he served in various roles at JPMorgan Chase & Co. since 1997, including as a Managing Director from 2011 to 2013 leading strategy for the mortgage banking division and as a Senior Equity Analyst from 2001 to 2011.

Adam L. Rosman

Age: 51

Position: Executive Vice President, General Counsel and Secretary

Adam L. Rosman has been our Executive Vice President, General Counsel and Secretary since October 2014. Before joining us, Mr. Rosman served as Group General Counsel of Willis Group Holdings plc from May 2012 until September 2014. He joined Willis Group in 2009, serving as Deputy Group General Counsel until May 2012. Previously, Mr. Rosman was Senior Vice President and Associate General Counsel at Cablevision Systems Corporation in Bethpage, New York, and before that he was a partner at the Washington D.C.-based law firm of Zuckerman Spaeder LLP. Between 1997 and 2003, Mr. Rosman was an Assistant United States Attorney in Washington, D.C. He also worked in 2000 and 2001 as Deputy Assistant to the President and Deputy Staff Secretary for President Clinton.

 

Related Transactions

Policies Regarding the Approval of Transactions with Related Parties

Our Related Party Transaction Policy requires Board approval of any transactions over $120,000 between First Data and an executive officer, director, 5% or more shareholder, or an immediate family member of any of such individual.

In addition, under our Director Code of Conduct, each director must report to our General Counsel upon learning of any prospective transaction or relationship in which the director will have a financial or personal interest (direct or indirect) that is with us, involves the use of our assets, or involves competition against us (consistent with any confidentiality obligation the director may have). Our General Counsel must then advise our Board of any such transaction or relationship and our Board must pre-approve any material transaction or relationship.

Under our Code of Conduct, executive officers may not use their personal influence to get us to do business with a company in which they, their family members or their friends have an interest. In situations where an executive officer is in a position of influence or where a conflict of interest would arise, the prior approval of our General Counsel is required.

Certain Relationships and Related Transactions

Since January 2016, KKR Capital Markets LLC, an affiliate of KKR, acted as an arranger and bookrunner for various financing transactions related to our credit agreements, and as an initial purchaser relating to issuances of our notes, and received underwriter and transaction fees totaling $17 million.

 

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Messrs. Kravis, Nuttall, and Olson are associated with KKR. Mr. Nuttall also serves as a director on the board of KKR Capital Markets LLC.

In September 2016, Mr. Bisignano’s daughter married a current employee of First Data, Sam Lituchy. For fiscal 2016, First Data paid Mr. Lituchy compensation and benefits of $159,615 and granted him 1,856 restricted stock units having a value of approximately $20,000 on the date of grant.

 

Share Ownership

Directors, Management, and Certain Beneficial Owners

The following table shows the amount of our Class A common stock and Class B common stock beneficially owned by each of our directors, each of our named executive officers, all of our directors and executive officers as a group, and each person or group known by us to be the beneficial owner of more than 5% of either Class A or Class B common stock.

We have determined beneficial ownership in accordance with the rules of the SEC. Applicable percentage ownership is based on 371,979,947 shares of Class A common stock and 544,031,779 shares of Class B common stock outstanding at February 1, 2017. In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, we deemed to be outstanding all shares of common stock subject to options, restricted stock or other convertible securities held by that person or entity that are currently exercisable or vested or that will become exercisable or vested within 60 days of February 1, 2017. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person.

Except as indicated by the footnotes below, (a) all amounts are as of February 1, 2017, (b) we believe, based on the information furnished to us, that the persons and entities listed have sole voting and investment power with respect to the shares they beneficially own, and (c) the address of each beneficial owner is c/o First Data Corporation, 225 Liberty Street, 29th Floor, New York, New York 10281.

 

     Shares Beneficially Owned        
     Class A
    (includes shares of    
Class B that are
immediately
convertible to
Class A) (1)
    Class B     % of
Total
Voting
  Power (2)  
 

Name of Beneficial Owner

   Shares          %             Shares              %        

 

 

5% Stockholders:

            

New Omaha Holdings L.P.(3)

     535,791,146        59.0%       535,791,146        98.5%       92.2%  

Entities affiliated with Fidelity (4)

     55,843,759        14.9%       2,717,010        *       1.4%  

Entities affiliated with The Vanguard Group (5)

     29,910,541        8.0%       0        -       *  

Trident V, L.P. and related affiliates (6)

     21,109,145        5.7%       0        -       *  

Named Executive Officers and Directors: (7)

            

Frank J. Bisignano (8)

     9,658,083        2.6%       7,467,504        1.4%       1.3%  

Himanshu A. Patel (9)

     1,248,299        *       797,403        *       *  

Daniel Charron (10)

     828,409        *       376,755        *       *  

Guy Chiarello (11)

     2,383,612        *       1,676,159        *       *  

 

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Barry McCarthy (12)

   680,322    *   433,927    *   *

Joe W. Forehand (13)

   1,253,792    *   1,139,354    *   *

Henry R. Kravis (3)(14)

   0    -   0    -   -

Heidi G. Miller (15)

   136,710    *   110,726    *   *

James E. Nevels (16)

   121,410    *   110,726    *   *

Scott C. Nuttall (17)

   100,000    *   0    -   *

Tagar C. Olson (18)

   0    -   0    -   -

Joseph J. Plumeri (19)

   2,668,551    *   1,889,572    *   *

Barbara Yastine

   0    -   0    -   -

All directors and executive officers as a group

(23 persons) (20)

   24,233,230    6.3%   16,827,610    3.1%   3.0%

* Less than one percent

 

(1) Shares of Class B common stock are convertible into shares of Class A common stock on a one-for-one basis at any time at the option of the holder with the prior consent of First Data, upon the election of the holders of a majority of the then-outstanding shares of Class B common stock, automatically upon transfer, with certain exceptions, and upon certain other events.
(2) Percentage of total voting power represents voting power with respect to all shares of our Class A common stock and Class B common stock, as a single class. The holders of our Class B common stock are entitled to ten votes per share and holders of our Class A common stock are entitled to one vote per share.
(3) Based on information reported by New Omaha Holdings L.P. in filings with the SEC, New Omaha Holdings LLC is the general partner of New Omaha Holdings L.P., KKR 2006 Fund L.P. is the sole member of New Omaha Holdings LLC, KKR Associates 2006 L.P. is the general partner of KKR 2006 Fund L.P., KKR 2006 GP LLC is the general partner of KKR Associates 2006 L.P., KKR Fund Holdings L.P. is the designated member of KKR 2006 GP LLC, KKR Fund Holdings GP Limited is a general partner of KKR Fund Holdings L.P., KKR Group Holdings L.P. is a general partner of KKR Fund Holdings L.P. and the sole shareholder of KKR Fund Holdings GP Limited, KKR Group Limited is the general partner of KKR Group Holdings L.P., KKR & Co. L.P. is the sole shareholder of KKR Group Limited, KKR Management LLC is the general partner of KKR & Co. L.P., and Messrs. Henry R. Kravis and George R. Roberts are the designated members of KKR Management LLC. In addition, Messrs. Kravis and Roberts have been designated as managers of KKR 2006 GP LLC by KKR Fund Holdings L.P. Each of the foregoing may be deemed to be the beneficial owner of a portion of these shares and New Omaha Holdings L.P. indicated that it had shared voting and investment power over these shares. The principal business office listed for all persons (other than George R. Roberts) is c/o Kohlberg Kravis Roberts & Co. L.P., 9 West 57th Street, Suite 4200, New York, NY 10019. The principal business office listed for George R. Roberts is c/o Kohlberg Kravis Roberts & Co. L.P., 2800 Sand Hill Road, Suite 200, Menlo Park, CA 94025.
(4) Based on information reported by FMR LLC and Abigail P. Johnson on a Schedule 13G/A filed with the SEC on February 14, 2017. FMR LLC indicated that as of December 30, 2016 it had sole voting power over 2,734,897 of these shares and sole investment power over all of these shares. FMR LL listed its address as 245 Summer Street, Boston, MA 02210.
(5) Based on information reported by The Vanguard Group on a Schedule 13G/A filed with the SEC on February 10, 2017. The Vanguard Group indicated that as of December 31, 2016 it had sole voting power over 223,483 of these shares, shared voting power over 70,700 of these shares, sole investment power over 29,638,958 of these shares, and shared investment power over 271,583 of these shares. The Vanguard Group listed its address as 100 Vanguard Blvd., Malvern, PA 19355.
(6) Based on information provided in a Schedule 13G filed jointly on February 14, 2017 by Trident V, L.P., Trident Capital V, L.P., Trident V Parallel Fund, L.P., Trident Capital V-PF, L.P., Trident V Professionals Fund, L.P., Stone Point GP Ltd., Trident Public Equity LP, Trident Public Equity GP LLC, and Stone Point Capital LLC. Trident V, L.P., Trident Capital V, L.P., Trident V Parallel Fund, L.P., Trident Capital V-PF, L.P., Trident V Professionals Fund, L.P., Stone Point GP Ltd., Trident Public Equity LP, and Trident Public Equity GP LLC indicated that as of December 31, 2016 each had shared investment and voting power over these shares and Stone Point Capital LLC indicated that as of December 31, 2016 it had shared voting power over these shares. The principal address for Trident V, L.P., Trident Capital V, L.P., Trident V Parallel Fund, L.P., Trident Capital V-PF, L.P., Trident V Professionals Fund, L.P., Stone Point GP Ltd., Trident Public Equity LP, and Trident Public Equity GP LLC is c/o Stone Point Capital LLC at its principal address, which is 20 Horseneck Lane, Greenwich, CT 06830.

 

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(7) No shares are pledged as security.
(8) Includes (i) 2,190,579 shares of Class A common stock, 1,900 of which are held by Frank J. Bisignano 2015 Grantor Retained Annuity Trust for which Mr. Bisignano shares voting and investment power, 325,465 of which are held by Frank J. Bisignano 2016 Grantor Retained Annuity Trust for which Mr. Bisignano shares voting and investment power, 5,800 of which are held by Mr. Bisignano’s spouse, 10,190 of which are held in accounts for the benefit of Mr. Bisignano’s children, 1,610,040 of which are restricted shares that have voting rights but not investment power but not investment power (132,189 of which will vest and be delivered within 60 days of February 1, 2017), and 139,084 of which are covered by options that are exercisable within 60 days of February 1, 2017, and (ii) 7,467,504 shares of Class B common stock, 277,134 of which are held by Frank J. Bisignano 2015 Grantor Retained Annuity Trust for which Mr. Bisignano has voting and investment power, and 5,467,231 of which are covered by options that are exercisable within 60 days of February 1, 2017.
(9) Includes (i) 427,508 restricted shares of Class A common stock that have voting, but not investment power (22,228 of which will vest and be delivered within 60 days of February 1, 2017) and 23,388 of which are covered by options that are exercisable within 60 days of February 1, 2017, and (ii) 797,403 shares of Class B common stock, 627,454 of which are covered by options that are exercisable within 60 days of February 1, 2017.
(10) Includes (i) 428,134 restricted shares of Class A common stock that have voting, but not investment power (22,353 of which will vest and be delivered within 60 days of February 1, 2017) and 23,520 of which are covered by options that are exercisable within 60 days of February 1, 2017, and (ii) 376,755 shares of Class B common stock, 210,909 of which are covered by options that are exercisable within 60 days of February 1, 2017 and 126,546 of which are restricted stock that will vest and be delivered within 60 days of February 1, 2017.
(11) Includes (i) 639,463 restricted shares of Class A common stock that have voting, but not investment power (64,619 of which will vest and be delivered within 60 days of February 1, 2017) and 67,990 of which are covered by options that are exercisable within 60 days of February 1, 2017, and (ii) 1,676,159 shares of Class B common stock, 1,245,682 of which are covered by options that are exercisable within 60 days of February 1, 2017.
(12) Includes (i) 246,395 shares of Class A common stock, 226,929 of which are restricted shares that have voting, but not investment power (13,749 of which will vest and be delivered within 60 days of February 1, 2017) and 14,466 of which are covered by options that are exercisable within 60 days of February 1, 2017, and (ii) 433,927 shares of Class B common stock, 279,123 of which are covered by options that are exercisable within 60 days of February 1, 2017.
(13) Includes (i) 114,438 shares of Class A common stock, 104,454 of which are held by a limited partnership for which Mr. Forehand shares voting and investment power and 9,984 of which are restricted shares that have voting, but not investment power (1,996 of which will vest and be delivered within 60 days of February 1, 2017), and (ii) 1,139,354 shares of Class B common stock, 991,273 of which are covered by options that are exercisable within 60 days of February 1, 2017 and 13,401 of which are restricted stock that will vest and be delivered within 60 days of February 1, 2017. Does not include 9,095 share units deferred under the Director Deferred Compensation Plan. Each unit represents the economic equivalent of one share of Class A common stock. The units become payable in cash upon termination of service as a director.
(14) Does not include 26,268 share units deferred under the Director Deferred Compensation Plan. Each unit represents the economic equivalent of one share of Class A common stock. The units become payable in cash upon termination of service as a director. For the avoidance of duplication, does not include shares owned by New Omaha Holdings L.P. described in footnote (3) above. Mr. Kravis serves as an executive of Kohlberg Kravis Roberts & Co. L.P. and/or one or more of its affiliates and disclaims beneficial ownership of the shares held by New Omaha Holdings L.P.
(15) Includes (i) 25,984 shares of Class A common stock, 10,000 of which are held by Ms. Miller’s spouse and 9,984 of which are restricted shares that have voting, but not investment power (1,996 of which will vest and be delivered within 60 days of February 1, 2017), and (ii) 110,726 shares of Class B common stock, 105,454 of which are covered by options that are exercisable within 60 days of February 1, 2017 and 3,515 of which are restricted stock that will vest and be delivered within 60 days of February 1, 2017. Does not include 16,337 share units deferred under the Director Deferred Compensation Plan. Each unit represents the economic equivalent of one share of Class A common stock.
(16) Includes (i) 10,684 shares of Class A common stock, 9,984 of which are restricted shares that have voting, but not investment power (1,996 of which will vest and be delivered within 60 days of February 1, 2017), and (ii) 110,726 shares of Class B common stock, 105,454 of which are covered by options that are exercisable within 60 days of February 1, 2017 and 3,515 of which are restricted stock that will vest and be delivered within 60 days of February 1, 2017.
(17) Includes 25,000 shares of Class A common stock that are held by a trust for the benefit of Mr. Nuttall’s family for which Mr. Nuttall shares voting and investment power. Does not include 29,643 share units deferred under the Director Deferred Compensation Plan. Each unit represents the economic equivalent of one share of Class A common stock. The units become payable in cash upon termination of service as a director. Mr. Nuttall serves as an executive of Kohlberg Kravis Roberts & Co. L.P. and/or one or more of its affiliates and disclaims beneficial

 

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ownership of the shares held by New Omaha Holdings L.P. The principal business address of Mr. Nuttall is c/o Kohlberg Kravis Roberts & Co. L.P., 9 West 57th Street, New York, New York 10019.

(18) Does not include 29,643 share units deferred under the Director Deferred Compensation Plan. Each unit represents the economic equivalent of one share of Class A common stock. The units become payable in cash upon termination of service as a director. Mr. Olson serves as an executive of Kohlberg Kravis Roberts & Co. L.P. and/or one or more of its affiliates and disclaims beneficial ownership of the shares held by New Omaha Holdings L.P. The principal business address of Mr. Olson is c/o Kohlberg Kravis Roberts & Co. L.P., 9 West 57th Street, New York, New York 10019.
(19) Includes (i) 778,979 shares of Class A common stock, 228,664 of which are restricted shares that have voting, but not investment power (45,732 of which will vest and be delivered within 60 days of February 1, 2017) and 50,315 of which are covered by options that are exercisable within 60 days of February 1, 2017, and (ii) 1,889,572 shares of Class B common stock, 250,000 of which are held by Joseph J. Plumeri II 2016 Grantor Retained Annuity Trust for which Mr. Plumeri has voting and investment power, and 852,073 of which are covered by options that are exercisable within 60 days of February 1, 2017. Does not include 3,163 share units deferred under the Director Deferred Compensation Plan. Each unit represents the economic equivalent of one share of Class A common stock.
(20) Includes (i) 7,405,620 shares of Class A common stock, 5,594,517of which are restricted shares that have voting, but not investment power (505,127 of which will vest and be delivered within 60 days of February 1, 2017) and 477,539 of which are covered by options that are exercisable within 60 days of February 1, 2017, and (ii) 16,827,610 shares of Class B common stock, 11,659,003 of which are covered by options that are exercisable within 60 days of February 1, 2017 and 305,159 of which are restricted stock that will vest and be delivered within 60 days of February 1, 2017. Does not include share units deferred under the Director Deferred Compensation Plan.

Section 16(a) Beneficial Ownership Reporting Compliance

Based on a review of reports filed with the SEC by our directors and executive officers regarding their ownership and transactions in our common stock and written representations from those directors and officers, we believe that each director and executive officer has filed timely reports under Section 16(a) of the Securities Exchange Act of 1934 during 2016, except for a Form 4 filed on June 13, 2016 for James Nevels that reported a purchase of 250 shares of Class A common stock.

 

Compensation Discussion and Analysis

Introduction

Our executive compensation program is designed to attract and retain quality individuals, as well as to motivate them to help us achieve our financial goals and create shareholder equity value. Our named executive officers (NEOs) are paid based on performance, primarily in time- and performance-vested equity, and competitively to the market.

How We Determine Compensation

Role of the Governance, Compensation and Nominations Committee

During 2016, the Governance, Compensation and Nominations Committee (the Committee) consisted of Messrs. Forehand, Kravis, Plumeri and Nuttall, with Mr. Nuttall serving as Chairperson.

Mr. Plumeri joined the Governance, Compensation and Nominations Committee on May 11, 2016. First Data recognizes that it is atypical for a named executive officer to make a mid-year transition from a management position to a committee member position. Due to the fact Mr. Plumeri transitioned roles in May of 2016, he had no input on his 2016 total compensation package. His 2016 total compensation was approved by the Governance, Compensation and Nominations Committee irrespective of Mr. Plumeri joining mid-year.

 

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The Committee approves all aspects of compensation for executive officers, including the form and compensation amounts as well as performance metrics and targets under our incentive plans. Specifically, the Committee:

 

    establishes our compensation philosophy in consultation with management and oversees management’s development and implementation of our compensation and benefits policies;
    evaluates performance and sets executive officers compensation,
    oversees our equity plans; and
    keeps informed of good governance best practices, and determines whether these should be applied here on compensation topics.

The Board of Directors, however, approves equity grants to executive officers, generally after Committee recommendations, to exempt the grants from short-swing profit rules.

Since we were privately owned until October 2015, the Committee has not participated in shareholder outreach on matters of executive compensation.

Role of Independent Consultant

Our Compensation Committee has the sole authority to retain and replace, as necessary, compensation consultants to provide it with independent advice. The Compensation Committee has engaged Johnson Associates, Inc. as its independent consultant to advice on executive and non-employee director compensation matters. This selection was made without the input or influence of management.

Role of Management in Executive Officer Compensation Decisions

Our Chief Executive Officer, Chief Human Resources Officer, and General Counsel generally provide information, data, analysis, updates, and compensation recommendations to the Committee. Management periodically engages compensation consultants to assist it in this process, and it utilizes market data from a wide variety of sources. As part of the Committee’s compensation setting process, our Chief Executive Officer makes recommendations to the Committee regarding compensation for executive officers other than himself.

Highlights of our Compensation Practices

Although we are a controlled company, we adhere to certain best practices regarding compensation.

 

What We Do

Emphasis on Equity-Based Total Compensation: The bulk of compensation is paid in equity rather than cash to better align management with shareholders. Additionally, our total compensation is highly correlated with company performance to further align management with shareholders.

 

Significant Share Ownership Guidelines: To further align interests, we have strict share ownership guidelines, which generally require executive officers and directors to retain much of the stock they acquire through equity compensation while they remain with First Data.

 

Clawback Provisions: We have “clawback” provisions for equity compensation, requiring executives to repay amounts when it is subsequently determined they should not have received them.

 

What We Don’t Do

☒ Hedging and Pledging of Our Stock: We prohibit all employees and directors from hedging First Data stock. The policy also prohibits pledging of First Data stock except if the

 

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employee or director receives the written consent of our General Counsel. We believe that these individuals generally should bear the full risks of equity ownership.

☒ Perquisites: We provide minimal executive benefits and perquisites.

 

Transition to Public Company Pay Practices

Our common stock first became publicly traded on October 15, 2015. The Committee is committed to adopting additional public company best pay practices over time, if it determines such changes are in the best interest of shareholders.

Our Compensation Philosophy and Strategy

We structure our compensation to reinforce growth goals and sustained share value creation. In particular:

 

    We focus on total compensation, which combines salary and incentives

 

    We use equity as the primary pay component

 

    We emphasize pay for performance

 

    We pay competitively, compared to market

 

LOGO                                  LOGO

Use of Equity and Share Retention Requirements

The Committee seeks to align management with shareholders by granting a significant portion of our NEOs’ total compensation in equity that increases in value as our financial performance improves. The Committee also seeks to retain management by requiring employment through equity vesting periods to receive the full value of equity-based awards. As further described below, the Committee’s first quarter 2017 equity-based awards reflect this approach: the awards generally vest over three years and generally require continued employment through each vesting date.

As described in more detail below, our CEO must retain at least 90% of the stock acquired from equity compensation, net of taxes, transaction costs, and charitable donations, until employment termination. Our other NEOs must retain at least 75% of the stock from equity compensation, net of taxes, transaction costs and charitable donations, through employment termination. These are among the most rigorous share retention requirements of any public company.

 

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Pay our NEOs Based on Performance

We are committed to rewarding executives based on our performance. At the end of each year, the Committee determines how First Data performed across various financial and qualitative objectives. The Committee then determines awards for each NEO, based both on company and individual performance.

The Committee also determines how the award for prior year performance will be paid. For 2016, the award was paid in two forms:

 

    A cash award under our Senior Executive Incentive Plan (the SEIP)
    An award of time vested restricted stock

Market Competitive Pay

The Committee wants to ensure executives are paid competitively. In order to successfully attract and retain top performing executives, our Human Resources Department annually reviews market data and aims to provide our executives with competitive total compensation opportunities.

The Chief Executive Officer, Human Resources Department, and the Committee periodically review our executive compensation practices against a peer group of companies. Our peer group includes direct competitors, frequently identified peer companies to our direct competitors, and other companies comparable to us in terms of industry, pay practices, revenue and market value. In 2016, Johnson Associates assisted the Committee in adjusting the peer group to reflect First Data today. The peer group considered by the Committee to determine 2016 NEO compensation included the following 17 companies:

 

●      Accenture plc

●      Computer Sciences

              Corporation

●      Fiserv, Inc.

●      MasterCard Incorporated

●      State Street Corporation

●      Vantiv, Inc.

  

●      ADP, LLC

●      Discover Financial

              Services, Inc.

●      Global Payments Inc.

●      NCR Corporation

●      Total System Services

●      Visa Inc.

  

●      The American Express

              Company

●      Fidelity National

              Information Services

●      Intuit Inc.

●      Paypal Holdings, Inc.

●      Worldpay

For 2016, the Committee used peer group data as one factor regarding pay. The Committee did not seek to benchmark NEO positions against the market data, nor did it pay NEOs at any particular peer group market percentile.

Summary of 2016 Compensation

2016 Performance

For 2016, we considered the following aspects of our performance to determine our NEO compensation:

 

    We grew year-over-year revenues 4%* excluding the impacts from currency and divestiture of the Australian ATM business in the third quarter of 2016 in a challenging worldwide operating environment, although this was short of our target for the year
    Free cash flow improved to $1.2 billion*, reflecting increased total segment EBITDA, lower cash interest, improved working capital performance, and lower capital expenditures

 

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    We continued organic deleveraging and balance sheet management as total borrowings and net debt reduced $1.1 billion* during 2016
    We grew our adjusted EBITDA to $2.9 billion*, exceeding our target for the year

*Non-GAAP financial measures. For information on how these metrics are calculated, see “Explanation of Non-GAAP Financial Measures” on page 36.

Elements of 2016 Compensation

In January 2017, the Committee determined our NEOs’ total compensation packages based on company and individual performance. Compensation included the following elements:

 

Element   Total Compensation

Base Salary

 

In effect at December 31, 2016

Incentive Compensation

 

Annual cash incentive under the Senior Executive Incentive Plan (the SEIP)

Time vested restricted stock

Other Compensation

 

Benefits and perquisites, as detailed below

Base salary

Base salary provides executives with a level of cash income predictability. The Committee believes base salaries for executives should reflect market competitive levels and factors such as experience and breadth of responsibilities, performance, individual skill set, pay relative to peers within First Data, and base pay in previous roles outside of First Data. Initial base salaries for our NEOs are agreed to at the time of hiring. Each executive officer is reviewed annually and is eligible for a discretionary annual merit increase. Base salaries may also be adjusted at other times to deal with competitive pressures or changes in job responsibilities. Mr. Bisignano’s salary was decreased in 2016 from $1,500,000 in 2015 to $1,320,000. Mr. Bisignano will not receive a base salary increase for 2017.

The following table shows our NEOs’ annual base salaries as of December 31, 2016:

 

Name and Principal Position    Base Salary

Frank J. Bisignano
Chief Executive Officer

   $1,320,000

Himanshu A. Patel
Executive Vice President Chief Financial Officer

   $600,000

Guy Chiarello
President

   $1,000,000

Daniel J. Charron
Executive Vice President, Head of Global Business Solutions

   $750,000

Barry C. McCarthy
Executive Vice President, Network & Security Solutions

   $750,000

2016 Incentive Compensation

Each NEO is eligible for an annual discretionary cash incentive and equity based on First Data’s performance against our strategic growth objectives and individual performance. Consistent with our overall compensation philosophy, cash incentives are generally much smaller than long-term equity awards.

For 2016, the Board, with input from management, set strategic goals for our performance. These goals included growing revenue and adjusted EBITDA, improving free cash flow, and managing expenses. These were the basis of First Data’s performance portion of incentive pay for 2016.

 

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The Committee also considers individual performance and contribution in meeting our strategic goals. The Committee considers a number of factors, including:

 

    the overall performance of the executive;
    the effective management of expenses;
    the effective management of risk;
    demonstration of leadership, teamwork, and innovation; and
    the extent of the accomplishment of our strategic goals.

The size of awards is based primarily on our annual financial performance, but individual performance is also considered. To best accomplish this, the Committee approved a fully discretionary funding structure for 2016 annual incentive compensation. This structure allowed the Committee to maintain the ability to appropriately reward the performance of each NEO.

Although many of our strategic goals were met, we did not meet our revenue growth goal, which was a key performance metric. As a result, the Committee exercised its discretion and determined that total incentive compensation for 2016 performance would be reduced compared to 2015.

After determining the total compensation for each NEO, the Committee determines the mix between cash and equity. For 2016, we elected to pay only a small portion (0% - 20%) of annual incentive compensation in cash. The reminder was paid in time-vested restricted stock awards which the Committee granted on February 1, 2017. We believe this cash/equity ratio best aligns the NEO’s interest with creating value for shareholders.

2016 Cash Incentive Awards

The annual cash incentives for 2016 performance under the SEIP were as follows:

 

Name and Principal Position    Annual Cash Incentive Award

Frank J. Bisignano
Chief Executive Officer

   $1,287,000

Himanshu A. Patel
Executive Vice President, Chief Financial Officer

   $255,000

Guy Chiarello
President

   $720,000

Barry C. McCarthy
Executive Vice President, Network & Security Solutions

   $971,210

Joseph Plumeri
Vice Chairman

   $0

Daniel Charron
Executive Vice President, Global Business Solutions

   $262,500

2017 Equity-Based Grants Based on 2016 Performance

In the first quarter of 2017, the Committee granted the awards shown below under the 2015 Omnibus Incentive Plan. The grants reflect the portion of 2016 incentives made in time vested equity. The awards have the following terms:

 

    restricted stock that generally vests in three installments, 20% on the first grant anniversary, 40% on the second anniversary and 40% on the third anniversary, subject to continued employment on each vesting date.

 

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Name and Principal Position   

Number of Shares of

Restricted Stock

  

Value of Shares of

Restricted Stock

Frank J. Bisignano
Chief Executive Officer

   467,799    $7,293,000

Himanshu A. Patel
Executive Vice President, Chief Financial Officer

   92,687    $1,455,000

Guy Chiarello
President

   261,706    $4,080,000

Barry C. McCarthy
Executive Vice President, Network & Security Solutions

   24,831    $387,125

Daniel Charron
Executive Vice President, Global Business Solutions

   95,413    $1,487,500

2016 Equity-Based Grants Based on 2015 Performance

In the first quarter of 2016, the Committee determined the award for 2015 performance and determined to grant a small portion of the award under the SEIP in cash, and the bulk of the award in a combination of time vested restricted stock and time vested options under the 2015 Omnibus Incentive Plan. The grants shown in the table below reflect the portion of the 2015 incentive award that was made in time vested equity. The awards have the following terms:

 

    options that generally vest in three equal installments on the first, second, and third anniversaries of the grant, subject to continued employment on each applicable vesting date; and
    restricted stock that generally vests in three installments, 20% on the first anniversary of the grant, 40% on the second anniversary of the grant and 40% on the third anniversary of the grant, subject to continued employment on each applicable vesting date.

 

Name and Principal Position    Number of Options   

Number of Shares of

Restricted Stock

Frank J. Bisignano
Chief Executive Officer

   417,252    660,946

Himanshu A. Patel
Executive Vice President Chief Financial Officer

   70,164    111,143

Guy Chiarello
President

   203,970    323,098

Barry C. McCarthy
Executive Vice President, Network & Security Solutions

   43,400    68,747

Joseph Plumeri
Vice Chairman

   219,973    228,664

Daniel J. Charron
Executive Vice President, Head of Global Business Solutions

   70,560    111,769

Cash Retention Award

During the year, the Committee granted a $2.5 million cash retention award to Mr. McCarthy. The Committee reviewed Mr. McCarthy’s total compensation and made the award to provide an ongoing incentive for Mr. McCarthy to remain with us for several years. The cash retention award is subject to certain repayment provisions. In the 3-year period between September 8, 2016 and September 8, 2019, if the company terminates the recipient’s employment for cause or the recipient voluntarily resigns without good reason, First Data has the right to require the recipient to pay back a pro-rata portion of the award based on the period of time the recipient worked over the 3-year term.

 

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Other Fiscal 2016 Compensation

From time to time, the Committee may award sign-on bonuses or equity-based awards in connection with an NEO joining us. Sign-on awards are used only when necessary to attract highly skilled individuals. Often, they are used to offset the loss of unvested compensation as a result of leaving their current employer.

Benefits and Perquisites

We focus on performance-based compensation while providing only minimal executive benefits. We do provide to all of our employees, including our NEOs, broad-based employee benefits that are intended to attract and retain employees while providing them with retirement and health and welfare security. These include:

 

    a 401(k) savings plan; and
    medical, dental, vision, life and disability insurance coverage, and dependent care and flexible spending accounts.

We do not currently offer defined benefit pension benefits or non-qualified retirement benefits to our NEOs. We also do not currently offer a company match in our 401(k) savings plan.

We provide our NEOs with limited perquisites and personal benefits not generally available to all employees such as reimbursements for relocation, housing, and moving expenses. In limited instances NEOs are also authorized to use the corporate aircraft for personal purposes. Per his employment agreement, Mr. Bisignano is provided with use of a car and driver and is eligible for financial planning assistance and use of the corporate aircraft. In addition, from time to time we provide tax gross-ups on perquisites in order to allow our NEOs to enjoy the full benefit of the perquisite.

Severance and Change in Control Agreements

We believe that reasonable and appropriate severance and change in control benefits are necessary in order to be competitive in First Data’s executive attraction and retention efforts. Our severance and change in control policy provides for payment rights, and benefits to the NEOs (other than Mr. Bisignano) on an involuntary termination of employment without cause. Under the policy, the cash severance is equal to one year’s base pay plus the bonus paid for the prior year before termination, if any, and a prorated bonus based on time worked during the year of termination. For Mr. McCarthy, this amount may not be less than twelve (12) months of salary plus his target bonus current set at $1,750,000. As a condition to receiving severance, all participating NEOs must release First Data and its employees from all claims they may have against them and agree to a number of restrictive covenants which are structured to protect us from potential loss of customers or employees and to prohibit the release of confidential company information. For Mr. Bisignano, his employment agreement described below provides for a cash severance payment equal to (1) the greater of (a) $9.5 million or (b) two times the sum of his base salary and the average of his annual incentive payments paid in cash in respect of the two fiscal years prior to the date of his termination and (2) a pro rata portion of the annual incentive payment that would have otherwise been payable if he had remained employed through such year.

Share Ownership Guidelines

We have an equity retention policy for our directors, NEOs, and all other members of our Management Committee, which require them to maintain a minimum share ownership level throughout their employment. Equity retention requirements are also in place for our highly compensated employees.

 

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Members of our Management Committee must retain at least 75% of the stock they acquire through equity compensation (net of taxes, transaction costs, and charitable donations) as long as they are employed by us. Our Chief Executive Officer and directors must retain at least 90% of the stock they acquire through equity compensation (net of taxes, transaction costs and charitable donations) as long as they are either employed by us or serve as a director. Under the policy, stock acquired through compensation plans includes vested restricted stock, restricted stock units, stock held after exercising options and vested equity contributed to qualified or non-qualified retirement plans, but does not include unvested restricted stock, unvested restricted stock units or vested or unvested stock options.

Exceptions to this policy may be granted by the Chief Executive Officer, in consultation with the chairperson of the Committee, as follows:

 

    where the retention commitment would create a financial hardship (in such instances, the Committee may also approve an alternative ownership plan that reflects both the intention of the policy and the individual’s circumstances); or
    other situations that the Chief Executive Officer deems appropriate.

If the Chief Executive Officer or a director requests an exception, that request must be submitted to the chairperson of the Committee for their review and approval.

Clawback Provisions

We have a policy to clawback incentive compensation of executive officers in the event of a subsequent accounting restatement to ensure that incentive compensation is rightfully earned by the executives.

Hedging and Pledging Prohibition

As part of our insider trading policy, all employees, including our named executive officers, and non-employee directors are prohibited from engaging in short sales or hedging transactions involving our securities. They are also prohibited from establishing margin accounts or otherwise pledging our securities. Pledging First Data stock may be permissible if the employee or director receives the written consent of our General Counsel.

Compensation and Risk

The Committee believes that the design and objectives of our executive compensation program provide an appropriate balance of incentives for executives and avoid inappropriate risks. In this regard, our executive compensation program includes, among other things, the following design features:

 

    Balances a mix of fixed versus variable, at-risk compensation;
    Balances a mix of short and long-term incentive compensation;
    Provides that variable compensation is based on a variety of qualitative and quantitative performance goals;
    Provides for a clawback of executive compensation in specified circumstances; and
    Share ownership guidelines.

Tax and Accounting Considerations

The Committee recognizes the tax and regulatory factors that can influence the structure of executive compensation programs. Section 162(m) of the Internal Revenue Code will limit our federal income tax deduction for compensation in excess of $1 million paid to NEOs except for the Chief Financial Officer.

 

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However, performance-based compensation can be excluded from the limitation as long as specified requirements are met.

We expect to be able to claim the benefit of a special exemption rule that applies to compensation paid (or compensation in respect of equity awards such as stock options or restricted stock granted) during a specified transition period following the IPO. This transition period may extend until the first annual stockholders’ meeting that occurs after the close of the third calendar year following the calendar year in which the IPO occurred, unless the transition period is terminated earlier under the Section 162(m) post-offering transition rules.

The Committee also considers the accounting implications of the various elements of our compensation program, including the impact on our financial results and the dilutive impact to stockholders of various forms of compensation.

 

Compensation Committee Report

The Governance, Compensation and Nominations Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management. Based on such review and discussions, the Governance, Compensation and Nominations Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference into the Form 10-K.

 

      Scott C. Nuttall, Chairperson
      Joe W. Forehand
      Henry R. Kravis
      Joseph J. Plumeri

Explanation of Non-GAAP Financial Measures

Information on how we calculate free cash flow, net debt reduction, and adjusted EBITDA (all presented on page 31) is disclosed on pages 50, 48 and 87 respectively in our Annual Report on Form 10-K for the year ended December 31, 2016. Additionally, the table below describes how we calculate revenue excluding the impacts from currency and divestiture of the Australian ATM business in the third quarter of 2016.

 

    Twelve months ended December 31,  
            2016                     2015             % Change  

Segment revenue

  $ 7,141       $ 7,048         1%  

Currency impact

    146         —      

Australian ATM Divestiture

    (32)       (50)    
 

 

 

   

 

 

   

Normalized segment revenue growth

  $ 7,255       $ 6,998         4%  
 

 

 

   

 

 

   

 

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Executive Compensation Tables

For 2016, our NEO compensation was substantially lower than 2015 because of one-time equity and cash retention awards related to our successful completion of an initial public offering on October 15, 2015. The Board of Directors decided to make these one-time awards primarily in equity with strict retention requirements to incentivize our NEOs to remain with us for the long term and ensure executive and shareholder interests are aligned.

Summary Compensation Table

The following table shows the compensation earned by, awarded to, or paid to our NEOs during fiscal years ended December 31, 2016, 2015, and 2014.

 

  Name and  

Principal

Position

   Year    Salary ($)    Bonus ($)
(1)
   Stock
Awards
($)(2)
   Option
Awards
($)(2)
  

Non-

Equity

Incentive

Plan
  Compensation ($)  

   Change in
  Pension Value  
and Non
Qualified
Deferred
Compensation
Earnings ($)
   All Other
  Compensation  
($)
  

  Total ($)  

(4)

Frank J. Bisignano,

Chief Executive Officer

     2016        1,320,000        1,287,000        8,275,044        2,372,578      --    --    580,551    13,835,173
     2015        1,500,000        5,000,000        22,139,546        22,628,619      --    --    292,561    51,560,726
     2014        1,500,000        1,140,000        4,500,000        1,629,000      --    --    533,199    9,302,199

Himanshu A. Patel,

Executive Vice President,

Chief

Financial

Officer

     2016        600,000        255,000        1,391,510        398,967      --    --    660    2,646,137
     2015        600,000        2,177,500        5,939,854        6,070,645      --    --    561    14,788,560
     2014        500,000        500,000        750,000        271,500      --    --    486    2,021,986

Guy Chiarello,

President

     2016        1,000,000        720,000        4,045,187        1,159,814      --    --    4,902    6,929,903
     2015        1,000,000        3,016,000        8,189,854        8,321,029      --    --    17,258    20,544,141
     2014        1,000,000        1,500,000        2,625,000      950,250      --    --    27,654    6,102,904

Barry C. McCarthy,

Executive Vice President, Network & Security Solutions

     2016        750,000        3,471,210        860,712        246,781      --    --    1,242    5,329,945
     2015        500,005        174,375        3,185,546        1,702,582      --    --    1,104    5,563,612
     2014        450,000        262,500        412,501        149,175      --    --    2,578    1,276,754

Joseph Plumeri,

Vice Chairman

     2016        750,000        --        2,862,873        1,267,262      --    --    143,126    5,023,261
     2015        1,200,000        --        3,645,000        1,348,488      --    --    9,927    6,203,415
     2014        1,239,288        540,000      3,000,000        4,012,000      --    --    6,273    8,797,561

Daniel Charron,

Executive Vice President, Global Business    

Solutions

     2016        750,000        262,500        1,399,347        401,218      --    --    1,932    2,814,998
     2015        656,250        5,283,500        9,314,854      9,561,429      --    --    1,541    24,817,574

 

  (1) Bonus amounts for 2016 included the follow: Mr. McCarthy - $2,500,000 cash retention award. Bonus amounts for 2015 include the following: Mr. Bisignano - $5,000,000 IPO cash retention award; Mr. Chiarello - $2,500,000 IPO cash retention award and $516,000 cash incentive award under the SEIP; Mr. Charron - $5,000,000 sign on bonus and $283,500 cash incentive award under the SEIP; Mr. Patel - $2,000,000 IPO cash retention award and $177,500 cash incentive award under the SEIP.
  (2)

The amounts shown in the “Stock Awards” column and “Option Awards” column are based on the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. For stock awards and option awards that have performance based vesting requirements, the awards were assigned a fair value of $13.66 and $8.66 per share on the date of grant using a Monte Carlo simulation model, respectively. For option awards that have time based vesting requirements, the awards were assigned a fair value of $7.94 per share for awards granted on January 14, 2015 and $7.89 per share for awards granted on January 28, 2015 and in February 2015 and $9.07 per share for awards granted on October 15, 2015 using a Black-Scholes model. Of the amounts shown in the “Stock Awards” column and “Option Awards” column for 2015, for Mr. Bisignano, $14,444,546 of the Stock Award amount and $19,781,811 of the Option Award amount is related to his IPO equity retention award; for

 

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Mr. Chiarello, $4,814,854 of the Stock Award amount and $7,064,928 of the Option Award amount is related to his IPO equity retention award; for Mr. Charron $4,814,854 of the Stock Award amount and $7,064,928 of the Option Award amount is related to his IPO equity retention award; and for Mr. Patel $4,814,854 of the Stock Award amount and $5,651,944 of the Option Award amount is related to his IPO equity retention award. Mr. Charron’s 2015 “Stock Awards” and “Option Awards” include $4,500,000 in sign on stock awards and $2,496,500 in sign on options awards.

  (3) Mr. Charron was hired on February 15, 2015. His base salary is $750,000. For Mr. Bisignano, of his $51,560,726 in Total Compensation in 2015, $39,226,357 or 76% was for the IPO-related equity and cash awards. For Mr. Chiarello, of his $20,554,141 Total Compensation in 2015, $14,379,782 or 70% was from the IPO-related equity and cash awards. For Mr. Charron, of his $24,817,574 Total Compensation for 2015, $11,879,782 or 48% was from the IPO-related equity awards. For Mr. Patel, of his $14,788,560 Total Compensation for 2015, $12,466,798 or 84% was from the IPO-related equity and cash awards.

All Other Compensation

The table below provides a breakdown of all other compensation for 2016 for the named executive officers:

 

Name        Life Insurance    
($)(1)
   Tax Gross-Up
    Payments  ($)(2)    
       Other Compensation    
($)(3)
       Total ($)    

Frank J. Bisignano

   4,902    117,772    457,877    580,551

Guy Chiarello

   4,902    0    0    4,902

Daniel Charron

   1,932    0    0    1,932

Himanshu A. Patel

   660    0    0    660

Barry C. McCarthy        

   1,242    0    0    1,242

Joseph Plumeri

   9,888    0    133,238    143,126

 

  (1) Includes the value of imputed income on life insurance premiums paid by First Data.
  (2) For Mr. Bisignano, $30,818 of the Tax Gross-Up Payments is for life/disability coverage, and $86,954 of the Tax Gross-Up Payments is for Mr. Bisignano’s personal use of the corporate aircraft.
  (3) Other Compensation for Mr. Bisignano includes amounts imputed for personal use of a corporate aircraft and ground transportation, valued at $259,390 and $149,284, respectively. Additionally, $49,203 was paid for insurance premiums. Mr. Plumeri was also provided ground transportation valued at $133,238. The ground transportation where predominately used for business purposes but First Data has included the entire cost.

Grants of Plan-Based Awards in 2016

The following table sets forth certain information with respect to awards granted during 2016 to our named executive officers. All equity awards were made under the 2015 Omnibus Incentive Plan.

 

Name    Grant Date (1)   

    All Other Stock    
Awards:

Number of

    Shares of Stock    

or Units (#)(2)

  

All Other

Option

Awards:

Number of
Securities
Underlying
    Options (#)(3)    

  

Exercise of

    Base Price of    
Option

Awards

($/Sh)

       Grant Date Fair    
Value of Stock
and Option
Awards ($)(4)
Frank J. Bisignano        2/24/2016      660,946                8,275,043  
   2/24/2016           417,252      12.52      2,372,578  
Himanshu A. Patel        2/24/2016      111,143                1,391,510  
   2/24/2016           70,164      12.52      398,967  
Guy Chiarello    2/24/2016      323,098                4,045,186  
   2/24/2016           203,970      12.52      1,159,814  
Joseph Plumeri    2/04/2016           75,473      13.00      445,607  
   2/24/2016           144,500      12.52      821,655  
   2/24/2016      228,664                2,862,873  

 

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Daniel Charron

   2/24/2016      111,769                1,399,347  
   2/24/2016           70,560      12.52      401,218  

Barry C. McCarthy

   2/24/2016      68,747                860,712  
   2/24/2016           43,400      12.52      246,781  

 

  (1) Grant date fair value for restricted stock and stock options is based on their valuation for financial reporting purposes at the time of grant. For time vesting restricted stock and stock options were assigned a fair value of $12.52 and 5.6862 per share, respectively using a Black-Scholes model.
  (2) Grants of time based restricted stock with a grant date of February 24, 2016 vest on the following schedule 20% on February 24, 2017, 40% on February 24, 2018 and 40% on February 24, 2019. Grants of time based stock options vest equally over three years on the following schedule 1/3 on February 24, 2017, 1/3 on February 24, 2018 and February 24, 2019.

Employment Agreements

In general, we do not enter into employment agreements with employees, including the NEOs, except in the case of Messrs. Bisignano and McCarthy.

Employment Agreement with Mr. Bisignano

We entered into an employment agreement with Mr. Bisignano, effective as of September 18, 2015 (Employment Agreement), which replaced Mr. Bisignano’s prior employment agreement with First Data and First Data Holdings Inc. dated April 28, 2013. The Employment Agreement provides for an initial term beginning on September 18, 2015 and ending on December 31, 2020. Beginning January 1, 2021, the term will be automatically extended for successive one-year periods unless terminated by either party with prior written notice.

Under the terms of the Employment Agreement, Mr. Bisignano will earn an annual base salary of $1,320,000, which base salary may be increased but not decreased; and, with respect to the 2015 fiscal year and each full fiscal year commencing with the 2016 fiscal year, is eligible to receive a discretionary annual incentive payment in such amount as determined in the sole discretion of the Committee, based upon its assessment of Mr. Bisignano’s performance, payable in the form of cash, equity-based awards or a combination thereof.

Mr. Bisignano is eligible to receive executive perquisites, fringe and other benefits consistent with what is provided to other executive officers of First Data. In addition, he is eligible to receive use of a car and driver, financial planning and use of private aircraft. Mr. Bisignano is also eligible to participate in First Data’s 401(k), medical, dental, short and long-term disability, and life insurance plans.

Under the terms of the Employment Agreement, Mr. Bisignano is subject to covenants not to (1) disparage First Data or interfere with existing or prospective business relationships, (2) disclose confidential information, (3) solicit customers and certain employees of First Data, and (4) compete with First Data. In the event of an alleged material breach of the covenant not to solicit certain employees of First Data and not to compete, any unpaid severance amounts will be suspended until a final determination has been made that Mr. Bisignano has in fact materially breached such covenants at which time the right to any further payment is forfeited.

2017 Incentive Compensation for Mr. McCarthy

First Data has agreed that Mr. McCarthy will receive cash incentive compensation for 2017 of $1,250,000.

 

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Outstanding Equity Awards at December 31, 2016

The following table sets forth information with respect to all unexercised option and unvested restricted stock awards to our named executive officers that were outstanding as of December 31, 2016.

 

        Option Awards      Stock Awards  
Name      Grant date        Number of
Securities
Underlying
  Unexercised  
Options (#)
Exercisable
    

Number of
Securities
Underlying
Unexercised
Options (#)

  Un-

  exercisable  

(2)

     Options
Exercise
  Price ($)  
     Option
  Expiration  
Date
    

  Number  
of

Shares

or Units
of Stock
That

  Have Not  
Vested

(#) (3)

    

Market
Value of
Shares or
Units of
Stock

That
  Have Not  
Vested
($)(3)

 
Frank Bisignano      2/10/2014                                            355,910        5,050,362  
     1/28/2015                                            432,787        6,141,247  
     2/24/2016                                            660,946        9,378,823  
     10/15/2015                 1,476,368        16.00        10/15/2025                    
     10/15/2015                 738,184        16.00        10/15/2025                    
     10/15/2015                                            632,729        8,978,424  
     10/15/2015                                            316,365        4,489,219  
     5/7/2013        4,989,521        3,326,348        11.07        5/7/2023                    
     2/10/2014        158,182        79,091        12.65        2/10/2024                    
     1/28/2015        120,218        240,437        14.23        1/28/2025                    
     2/24/2016                 417,252        12.52        2/24/2026                    
Guy Chiarello      2/10/2014                                            207,614        2,946,042  
     1/14/2015                                            189,819        2,693,531  
     2/24/2016                                            323,098        4,584,760  
     10/15/2015                 527,274        16.00        10/15/2025                    
     10/15/2015                 263,637        16.00        10/15/2025                    
     10/15/2015                                            210,910        2,992,812  
     10/15/2015                                            105,455        1,496,406  
     7/11/2013        949,092        632,730        11.07        07/11/2023                    
     2/10/2014        92,272        46,137        12.65        1/14/2025                    
     1/14/2015        52,727        105,455        14.23        1/14/2025                    
     2/24/2016                 203,970        12.52        2/24/2026                    
Daniel Charron      2/24/2015                                            253,092        3,591,375  
     2/24/2016                                            111,769        1,586,002  
     10/15/2015                 527,274        16.00        10/15/2025                    
     10/15/2015                 263,637        16.00        10/15/2025                    
     10/15/2015                                            210,910        2,992,812  
     2/24/2015        105,454        210,910        14.23        2/24/2025                    
     2/24/2016                 70,560        12.52        2/24/2026                    
Joseph Plumeri      2/10/2014                                            237,273        3,366,903  
     1/28/2015                                            205,004        2,909,006  
     2/24/2016                                            228,664        3,244,742  
     10/12/2013        316,364                 11.07        10/12/2023                    
     5/13/2014        421,819        210,910        12.65        5/13/2024                    
     1/28/2015        56,945        113,891        14.23        1/28/2025                    
     2/4/2016        25,157        50,316        13.00        2/4/2026                    
     2/24/2016                 144,500        12.52        2/24/2026                    
Barry C. McCarthy      2/10/2014                                            32,625        462,948  
     1/14/2015                                            43,764        621,011  

 

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       2/24/2016                                            68,747        975,519  
     1/30/2008        53,386                 9.49        1/30/2018                    
     3/11/2008        28,472                 9.49        3/11/2018                    
     5/12/2010        26,693                 9.49        5/12/2020                    
     10/15/2015                 105,455        16.00        10/15/2025                    
     10/15/2015                 52,727        16.00        10/15/2025                    
     10/15/2015                                            105,455        1,496,406  
     10/15/2015                                            52,727        748,196  
     9/23/2009        26,693                 9.49        9/23/2019                    
     3/18/2011        27,615                 9.49        3/18/2021                    
     3/8/2012        29,527                 9.49        3/8/2022                    
     7/20/2013        40,675                 11.07        7/20/2023                    
     2/10/2014        14,500        7,250        12.65        2/10/2024                    
     1/14/2015        12,156        24,313        14.23        1/14/2025                    
     2/24/2016                 43,400        12.52        2/24/2026                    
Himanshu A. Patel      2/10/2014                                            59,318        841,722  
     1/14/2015                                            63,273        897,843  
     2/24/2016                                            111,143        1,577,119  
     10/15/2015                 421,819        16.00        10/15/2025                    
     10/15/2015                 210,910        16.00        10/15/2025                    
     10/15/2015                                            210,910        2,992,812  
     10/15/2015                                            105,455        1,496,406  
     6/3/2013        522,000        348,002        11.07        6/3/2026                    
     2/10/2014        26,363        13,182        12.65        2/10/2024                    
     1/14/2015        17,575        35,152        14.23        1/14/2025                    
     2/24/2016                 70,164        12.52        2/24/2026                    

 

  (1) All awards prior to October 15, 2015 were made under the 2007 Stock Incentive Plan for Key Employees of First Data Corporation and its Affiliates and are comprised of Class B stock. All other awards were made under the First Data Corporation 2015 Omnibus Incentive Plan and are comprised of Class A stock. The primary distinction between the two classes of stock is voting rights. Class B stock receives ten votes per share while Class A receives one vote per share.
  (2) The grants in this column are stock option awards that vest on the following terms subject to continued employment on each applicable vesting date except as noted below in the section entitled “Termination and Change in Control Payments and Benefits. All stock options listed that were granted on February 10, 2014 vest in three equal annual installments from January 1, 2014. All other stock option grants in 2013 and 2014 vest in equal annual installments of 20% each year over a five-year period on the anniversary of the grant date. The vesting terms of the 2015 stock option awards are described in footnote 1 of the Grants of Plan-Based Awards Table.
  (3) The grants in this column are restricted stock awards that vest on the following terms subject to continued employment on each applicable vesting date except as noted below in the section entitled “Termination and Change in Control Payments and Benefits. All restricted stock awards that were granted on February 10, 2014 vested on January 1, 2017. Mr. Patel’s restricted stock award dated June 3, 2013 vested on June 3, 2016 and Mr. Chiarello’s restricted stock award dated July 11, 2013 vested on March 15, 2016.

2015 Omnibus Incentive Plan

Unless otherwise governed by the applicable award agreement and/or grant notice for the applicable grant(s) at issue, the First Data Corporation 2015 Omnibus Incentive Plan (2015 Omnibus Incentive Plan) provides for the treatment of awards granted under the 2015 Omnibus Incentive Plan upon certain terminations.

The award agreements under the 2015 Omnibus Incentive Plan have been amended to provide that a Participant’s Termination due to death or Disability will result in each outstanding unvested time-based Option, Restricted Stock, or Restricted Stock Unit grant to immediately vest and all outstanding vested Options will remain exercisable for the following three years. For each unvested performance-based Option,

 

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Restricted Stock, or Restricted Stock Unit award, the award will remain outstanding for three-years after a Participant’s Termination due to death or Disability and will vest and, for Options, be exercisable if the performance criteria is satisfied within a three-year period. In no event will an option be exercisable after the expiration of the original Option period.

Under the 2015 Omnibus Incentive Plan a participant’s Termination for Cause will result in all outstanding Options granted to the Participant immediately terminating and expiring. A Participant’s Termination for any other reason will result in each outstanding unvested Option granted to such Participant immediately terminating and expiring and each outstanding vested Option remaining exercisable for ninety (90) days thereafter, but in no event beyond the expiration of the Option Period.

Stock Appreciation Rights granted under the 2015 Plan have the same treatment as Options upon the termination of a Participant as discussed above.

In the event of a Participant’s Termination for any reason, the Participant’s Restricted Stock and Restricted Stock Units granted under the 2015 Plan that are unvested will result in all vesting with respect to such Participant’s Restricted Stock and Restricted Stock Units ceasing and unvested shares shall be forfeited to First Data by the Participant for no consideration as of the date of such Termination.

In the event of a Change in Control, the Compensation Committee of the Board shall make such proportionate substitutions or adjustments, if any, as it deems equitable to the terms of any outstanding awards.

2007 Stock Incentive Plan

Unless otherwise governed by First Data Corporation Severance/Change in Control Policy and/or any other employment agreements, offer letters, the applicable award agreement and/or grant notice for the applicable grant(s) at issue, or any other arrangements between the applicable executive and First Data, the 2007 Stock Incentive Plan for Key Employees of First Data Corporation and its Affiliates (2007 Stock Incentive Plan) provides for the treatment of awards granted under the 2007 Stock Incentive Plan upon certain events and terminations.

Upon a Change in Control (as defined under the 2007 Stock Incentive Plan), if determined by the Compensation Committee of the Board in the applicable grant agreement or otherwise determined by the Compensation Committee of the Board in its sole discretion, any outstanding grants then held by Participants which are unexercisable or otherwise unvested or subject to lapse restrictions may automatically be deemed exercisable or otherwise vested or no longer subject to lapse restrictions as of immediately prior to the Change in Control and the Compensation Committee of the Board may, as allowed under Section 409A of the Code, cancel such awards for fair value as determined under the Plan, provide for the issuance of substitute awards or provide that for a period of at least ten business days prior to the Change in Control, any Stock Options or Stock Appreciation Rights shall be exercisable as to all shares subjected thereto.

The 2007 Stock Incentive Plan provides that the grant agreements issued under the 2007 Stock Incentive Plan must provide for the treatment of the grant in the event of the termination of employment or other service relationship, death or disability of the Participant and may also include provisions concerning the treatment of the grant in the event of a Change in Control.

The 2007 Stock Incentive Plan Form Stock Option grant agreement also provides that all unexercisable options as of the date of Participant’s termination of employment for any reason shall immediately expire. Options that are unvested Time Options that would have vested on the next anniversary of the Closing Date shall vest pro rata for terminations of employment resulting from death or Disability, termination without Cause or resignation by the Participant for Good Reason.

 

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Exercisable options expire as follows with regards to the various terminations of employment unless the option expires first due to its expiration date on the tenth (10th) anniversary of the Closing Date. Options expire immediately upon the date of the Participant’s termination of employment for Cause or termination of employment by the Participant without Good Reason. Options expire one hundred and eighty (180) days from the date of the Participant’s termination of employment without Cause or by the Participant for Good Reasons.

The 2007 Stock Incentive Plan Form Stock Option and Restricted Stock grant agreements have been amended to provide that a Participant’s Termination due to death or Disability will result in each outstanding unvested Option or Restricted Stock Unit grant to immediately vest and all outstanding vested Options will remain exercisable for the following three years. In no event will an option be exercisable after the expiration of the original Option period.

Option Exercises and Stock Vested in 2016

The following table shows the number of shares acquired and the value realized during 2016 upon the exercise of stock options and the vesting of restricted stock previously granted to each of the Named Executive Officers.

 

      Option Awards (1)    Stock Awards (2)
Name    Number of
shares
  acquired on  
exercise (#)
   Value realized
  on exercise ($)  
   Number of shares
  acquired on vesting  
(#)
     Value realized  
on vesting ($)

Frank J. Bisignano

   -    -    108,196    1,312,417

Himanshu A. Patel

   -    -    253,091    3,069,993

Guy Chiarello

   -    -    634,987    7,960,906

Daniel Charron

   -    -    63,272    767,489

Barry C. McCarthy        

   -    -    83,574    1,036,763

Joseph Plumeri

   -    -    51,251    621,674

 

  (1) During 2016, no NEOs exercised stock options.
  (2) During 2016 and in conjunction with the IPO, once the underwriter imposed lock-up was lifted on April 11, 2016, NEOs had restricted stock that vested.

Pension Benefits

During 2016, no NEOs participated in either a tax-qualified or non-qualified defined benefit plan sponsored by First Data.

Non-Qualified Deferred Compensation for 2016

During 2016, no NEOs participated in a non-qualified deferred compensation plan sponsored by First Data.

Potential Payments Upon Termination or Change in Control

The following table shows potential payments to our named executive officers under existing contracts for various scenarios involving a change in control or termination of employment, assuming a December 31, 2016 termination date or change in control. Please see the narrative above under “Employment Agreements” and “Certain Other Severance and Change in Control Agreements” for a description of payments contemplated by these agreements.

 

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Termination and Change in Control Payments and Benefits

 

Name

  Cash
      Severance      
Payments
($)(1)

 

    Post-
      Termination      
Health  &
Welfare
Benefits
($)(2)
          Financial      
Planning
($)(3)

 

    Unvested
Stock
      Options($)(4)      

 

    Unvested
      Restricted      
Stock
($)(5)

 

          Estimated      
280G  Tax
Gross-Up
($)(6)

 

        ($)Total    

 

 

 

Frank J. Bisignano

             

Termination due to non-renewal by First Data of the Employment Term

    9,500,000       306,690       40,000                         9,846,690  

Termination without Cause or for Good Reason

    9,500,000       306,690       40,000       6,281,345       10,053,018             26,181,053  

Termination due to death

    9,500,000                   6,281,345       10,053,018             26,181,053  

Termination without Good Reason

          306,690                       306,690  

Termination due to Disability

    9,500,000       306,690             6,281,345       10,053,018             26,181,053  

Termination without Cause or for Good Reason (in connection with a Change in Control

    9,500,000       306,690       40,000       11,196,817       29,548,859             50,592,365  

Change in Control (without a Termination)

                      11,196,817       24,504,544             35,701,361  

Guy Chiarello

             

Termination without Cause (other than due to death or Disability) or termination for Good Reason

    11,505,017       13,124             2,088,473       5,072,559             18,679,173  

Termination due to death or Disability

                      2,088,473       5,072,559             7,161,032  

Termination without Cause or for Good Reason (in connection with a Change in Control)

    11,505,017       13,124             2,385,798       13,217,148             27,121,087  

Change in Control (without a Termination)

                      2,385,798       13,217,148             27,121,087  

Daniel Charron

             

Termination without Cause (other than due to death or Disability) or termination for Good Reason

    4,584,066       13,037             32,732       1,052,462             5,682,297  

Termination due to death or Disability

                      32,732       1,052,462             1,085,194  

 

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Termination without Cause or for Good Reason (in connection with a Change in Control)

  4,584,066   13,037     117,835   8,170,190     12,885,129

Change in Control (without a Termination)

        117,835   8,170,190     8,288,025

Barry C. McCarthy

             

Termination without Cause (other than due to death or Disability) or termination for Good Reason

  3,390,203   11,223     30,988   1,017,429     4,449,843

Termination due to death or Disability

        30,988   1,017,429     1,048,417

Termination without Cause or for Good Reason (in connection with a Change in Control)

  3,390,203   11,223     83,643   3,555,886     7,040,955

Change in Control (without a Termination)

        83,643   3,555,886     3,639,529

Himanshu A. Patel

             

Termination without Cause (other than due to death or Disability) or termination for Good Reason

  4,267,977   11,132     1,123,954   1,712,356     7,115,419

Termination due to death or Disability

        1,123,954   1,712,356     2,836,310

Termination without Cause or for Good Reason (in connection with a Change in Control)

  4,267,977   11,132     1,223,240   6,309,498     11,811,848

Change in Control (without a Termination)

        1,223,240   6,309,498     7,532,738

Joseph Plumeri

             

Termination without Cause (other than due to death or Disability) or termination for Good Reason

  4,880,137   10,953     148,483   5,312,174     10,351,748

Termination due to death or Disability

        148,483   5,312,174     5,460,657

 

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Termination without Cause or for Good Reason (in connection with a Change in Control

  4,880,137   10,953     625,992   9,520,653   3,361,938   15,037,735

Change in Control (without a Termination)

        625,992   9,520,653     10,146,645

 

  (1) Upon termination of Mr. Bisignano’s employment by First Data without “cause” (as defined in the Employment Agreement), by Mr. Bisignano for “good reason” (as defined in the Employment Agreement), due to Mr. Bisignano’s death or “disability” (as defined in the Employment Agreement) or due to First Data’s non-renewal of the employment term, conditioned upon the execution and effectiveness of a release of claims against First Data and its affiliates and in addition to certain accrued amounts, Mr. Bisignano will be entitled to receive (1) payment, in installments ratably over a 24 month period (Severance Period), of an amount equal to the greater of (X) $9.5 million or (Y) two times the sum of his base salary and the average of his annual incentive payments paid in cash in respect of the two fiscal years prior to the date of his termination (provided, that if Mr. Bisignano’s employment is terminated by him for “good reason” following a “change of control” (within the meaning of Section 409A of the Code) within two years following such “change of control,” the payment will be made in a lump sum cash payment) and (2) a pro rata portion of the annual incentive payment, if any, that would have otherwise been payable in respect of such year if he had remained employed through such year. For all other NEOs, reflects cash severance payable under the Policy as in effect on January 1, 2015, assuming a termination date of December 31, 2015.
  (2) Upon termination of Mr. Bisignano’s employment by First Data without “cause,” by Mr. Bisignano for “good reason,” due to Mr. Bisignano’s “disability” or due to First Data’s non-renewal of the employment term, Mr. Bisignano is entitled to receive health insurance, excess disability and life insurance coverage until his death, unless earlier terminated in accordance with the Employment Agreement (Retiree Benefits). In addition, upon termination of Mr. Bisignano’s employment with First Data by Mr. Bisignano without “good reason,” in addition to certain accrued amounts, Mr. Bisignano will be entitled to receive the Retiree Benefits. The Retiree Benefits in this table assumes Mr. Bisignano dies at age 80 and benefits are not terminated before then. With respect to the other NEOs, represents First Data-paid portion of medical, dental and vision benefits for each executive for a period of one year under the Policy.
  (3) Upon termination of Mr. Bisignano’s employment by First Data without “cause,” by Mr. Bisignano for “good reason,” or due to First Data’s non-renewal of the employment term, Mr. Bisignano is entitled to receive payment, in installments over the Severance Period of an amount equal to financial planning benefits for two years following his termination of employment.
  (4)

Mr. Bisignano’s 2013 stock option agreement provides that, in the event of a termination of employment due to death or “disability,” by him for Good Reason or by First Data without Cause, the unvested options that would have otherwise vested during the 12 month period following such termination will immediately vest and become exercisable. Messrs. Chiarello’s and Patel’s 2013 stock option agreements contain the same provision as Mr. Bisignano’s 2013 stock option agreement. Other than as specifically provided in Mr. Bisignano’s 2013 stock option agreement and not including the stock options granted in connection with the IPO, with respect to all other outstanding stock options held by the NEOs, in the event of a termination of an NEO’s employment due to death or “disability,” by the NEO for “good reason” or by First Data without “cause,” the unvested options that would have vested on the next anniversary of the grant date will vest pro-rata as determined by multiplying the number of shares of common stock subject to the option that would have so vested by a fraction, the numerator of which corresponds to the number of completed months of employment since the anniversary of the grant date immediately preceding the date of the termination of employment and the denominator of which is 12.For all stock options granted to the NEOs in connection with the IPO, in the event of a termination due to death or “disability,” by the NEO for “good reason” or by First Data without “cause,” the unvested time options that would have vested on the next Time-Vesting Date vest pro-rata as determined by multiplying the number of Time Options that would have vested on such next Time-Vesting Date by a fraction, the numerator of which corresponds to the number of completed months of employment since the Time-Vesting Vesting Date immediately preceding the date of the termination of employment and the denominator of which is 12. In the event of a termination prior to the Performance Vesting Date for the Performance Options that were granted to the NEOs in connection with the IPO, all unvested Performance Options shall be forfeited as of the date of the termination of employment. In addition, in the event of a Change in Control, all unvested options become fully vested, except for the Performance Options granted in connection with the IPO. If the Performance Vesting Date has not occurred and the IPO does not result in a

 

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transaction equal to or exceeding $32.00, then all Performance Options will be forfeited as of the date of the Change in Control.

  (5) Mr. Chiarello’s 2013 Restricted Stock agreement provides that in the event of termination due to death, “disability,” involuntary termination for any reason or voluntary termination, then all unvested restricted stock shall become 100% vested if such termination occurs on or after July 8, 2015. Mr. Patel’s 2013 Restricted Stock agreement provides that in the event of termination due to death, “disability,” involuntary termination for any reason or voluntary termination, then 80% of his unvested restricted stock shall vest if such termination occurs after January 1, 2015 but on or before December 31, 2015. The terms of restricted stock awards issued to NEOs in 2014 and 2015, except for those issued in connection with the IPO, provide that, if the NEO’s employment terminates due to death or disability or is terminated by First Data without cause or by the NEO for good reason, awards will vest based on the number of full months completed since the grant date divided by 36 months. For all restricted stock granted to the NEOs in connection with the IPO, in the event of a termination due to death or “disability,” by the NEO for “good reason” or by First Data without “cause,” the unvested time restricted stock that would have vested on the next Time-Vesting Date vest pro-rata as determined by multiplying the number of shares that would have vested on such next Time-Vesting Date by a fraction, the numerator of which corresponds to the number of completed months of employment since the Time-Vesting Vesting Date immediately preceding the date of the termination of employment and the denominator of which is 12. In the event of a termination prior to the Performance Vesting Date for the Performance Restricted Stock that were granted to the NEOs in connection with the IPO, all unvested Performance Restricted Stock shall be forfeited as of the date of the termination of employment. In addition, in the event of a Change in Control, all unvested shares of restricted stock will become fully vested, except for the Performance Restricted Stock granted in connection with the IPO. If the Performance Vesting Date has not occurred and the IPO does not result in a transaction equal to or exceeding $32.00, then all Performance Restricted Stock will be forfeited as of the date of the Change in Control.
  (6) Under the terms of Mr. Bisignano’s Employment Agreement, First Data agreed that during the term of the Employment Agreement and for a period of two years thereafter, it would continue for his benefit the tax-gross up provided under the Policy as in effect as of the date of the Employment Agreement. Under the terms of the Policy, a “Gross-Up Payment” is made if it is determined that any Code Section 280G parachute payments provided by First Data to or, on behalf of, an eligible executive would be subject to the excise tax imposed by Code Section 4999. The Gross-Up Payment is an amount so that after payment of all taxes, the eligible executive retains an amount equal to the excise tax imposed by Code Section 4999. However, if it is determined that the executive officer is entitled to a Gross-Up Payment but the payments to the executive officer do not exceed 110% of the amount which is one dollar less than the smallest amount that would give rise to any excise tax, then no Gross-Up Payment will be made and the payments will be reduced so as to not give rise to the excise tax. Executive officers are eligible for this payment regardless of whether their employment is terminated in connection with a Change in Control. However, the provision in the Policy regarding “Gross-Up Payments” will not apply with respect to any payment that would otherwise be subject to the excise tax if such excise tax would be avoided by obtaining stockholder approval of the payment in the manner prescribed by Code Section 280G. As of December 31, 2014, the excise tax could have been avoided by obtaining stockholder approval pursuant to Code Section 280G. Accordingly, no amounts are reflected above.

Description of Termination Provisions

Employment Agreement Termination Provisions

Upon termination of Mr. Bisignano’s employment by First Data without “cause” (as defined in the Employment Agreement), by Mr. Bisignano for “good reason” (as defined in the Employment Agreement), due to Mr. Bisignano’s death or “disability” (as defined in the Employment Agreement) or due to First Data’s non-renewal of the employment term, conditioned upon the execution and effectiveness of a release of claims against First Data and its affiliates and in addition to certain accrued amounts, Mr. Bisignano will be entitled to receive (1) payment, in installments ratably over a 24 month period (Severance Period), of an amount equal to the greater of (X) $9.5 million or (Y) two times the sum of his base salary and the average of his annual incentive payments paid in cash in respect of the two fiscal years prior to the date of his termination (provided, that if Mr. Bisignano’s employment is terminated by him for “good reason” following a “change of control” (within the meaning of Section 409A of the Code) within two years following such “change of

 

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control,” the payment will be made in a lump sum cash payment) and (2) a pro rata portion of the annual incentive payment, if any, that would have otherwise been payable in respect of such year if he had remained employed through such year. In addition, Mr. Bisignano is entitled for continued health insurance coverage in accordance with the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA), including medical and dental coverage and excess disability and life insurance coverage during the COBRA period. First Data’s portion of the cost of such coverage and the provision of the coverage itself will be borne/provided by First Data in a manner that does not affect its medical plan or otherwise result in adverse tax consequences as determined in its sole discretion. Thereafter, and until Mr. Bisignano’s death (Retiree Benefits), First Data shall provide Mr. Bisignano with health insurance, excess disability and life insurance coverage that is reasonable comparable to the coverage provided to Peer Executives under such policies at such time. However, in the event that First Data determines in its reasonable judgment that maintaining the Retiree Benefits would adversely affect its medical plan or the benefits paid thereunder or would result in penalties under Public Health Service Act section 2716 or related provisions of the Internal Revenue Code or the Employee Retirement Income Security Act of 1974, as amended, or any other applicable law, then First Data may cease providing the Retiree Benefits to Mr. Bisignano and in lieu thereof agrees to pay Mr. Bisignano, on the first business day of each month, a monthly amount equal to First Data’s allocable portion of the cost of such Retiree Benefits. Mr. Bisignano’s rights to the Retiree Benefits shall terminate as of (i) the date on which reasonably comparable health insurance is made available to Mr. Bisignano by a subsequent employer, including First Data, or through the employment of his spouse, if any, or (ii) if Mr. Bisignano’s employment with First Data was terminated by Mr. Bisignano without Good Reason or due to Mr. Bisignano’s election not to extend the Term, in each case, the date on which Mr. Bisignano commences any employment, consulting, advisory, directorship, agency, promotional or independent contractor arrangement with any person or Entity (as defined in the Employment Agreement) (other than any such arrangement in which Mr. Bisignano serves solely as a non-executive director).

In addition to the amounts described above, on the 60th day after Mr. Bisignano’s termination of employment, to the extent not theretofore paid, Mr. Bisignano shall be entitled to: (A) any other accrued but unpaid Base Salary to the date of termination of employment; (B) any Annual Incentive Payments earned but unpaid for fiscal years ended prior to the year in which the date of termination occurs; (C) contingent upon the execution and effectiveness of the Release prior to the 60th day after Mr. Bisignano’s termination of employment, a pro rata portion of the Annual Incentive Payment, if any, for the fiscal year in which the termination of employment occurs, equal to the product of (x) the full Annual Incentive Payment amount that would otherwise be payable in respect of such year if Mr. Bisignano had remained employed through such year, if any, without any reduction due to individual performance factors, and (y) a fraction, the numerator of which is equal to the number of days elapsed in such fiscal year to the date of termination and the denominator of which is 365, with such incentive payment amount to be paid in the calendar year following the year in which Mr. Bisignano’s termination occurred at the time that the full Annual Incentive Payment amount would have been paid had Mr. Bisignano’s employment not been terminated, (D) to the extent applicable to Mr. Bisignano and to the extent provided under the terms of the Severance/Change in Control Policy (as defined in the Employment Agreement), if any outstanding cash incentive awards granted to Executive are eligible to become fully vested and payable solely contingent upon Mr. Bisignano’s continued employment hereunder and the passage of time, continued vesting of such awards, with payment of such awards to be made in accordance with the awards’ terms, notwithstanding Mr. Bisignano’s earlier termination of employment, (E) any unreimbursed business expenses incurred prior to the date of termination and to which Mr. Bisignano is entitled to be reimbursed under Section 5(f) of the Employment Agreement and (F) other amounts or accrued benefits required to be paid or provided or which Mr. Bisignano is eligible to receive (whether on such 60th day or thereafter) under any employee benefit plan, program, policy or practice or contract or agreement of First Data (all of such other amounts and benefits referred to Section 9(a)(ii) of the Employment Agreement shall be referred to as the Other Benefits). For the avoidance of doubt, Mr. Bisignano shall not be a participant in that certain Company Severance/Change in Control Policy as amended and restated effective as of September 24, 2007 and amended by Amendment No. 1 thereto, as it may be further amended from time to time.

 

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Severance/Change in Control Policy

We believe that reasonable and appropriate severance and Change in Control benefits are necessary in order to be competitive in our executive attraction and retention efforts. As such, we adopted the First Data Corporation Severance/Change in Control Policy (Management Committee Level) (Policy) which provides for certain payments, rights and benefits to the NEOs (other than Mr. Bisignano) upon an involuntary termination of employment without cause or for good reason with or without a Change in Control.

The Policy provides for the following payments, rights and benefits for Eligible Executives (as defined in the Policy) who are involuntarily terminated (other than for Cause or due to Disability) or who voluntarily terminate for Good Reason, after January 1, 2015:

 

  (1) an amount equal to the product of (i) the sum of the executive’s Base Salary and the incentive award paid to the executive, if any, pursuant to the SEIP (or the incentive plan then applicable to the executive) for the year immediately preceding the year in which the termination date occurs, and (ii) one (1) year (Severance Period); plus
  (2) A pro-rata portion of the incentive award paid to the Eligible Executive pursuant to the SEIP (or the incentive plan then applicable to the executive) for the year immediately preceding the year in with the termination date occurs. Such payment is based on the portion of the year the Eligible Executive was actively employed by First Data;
  (3) Continuation of medical, dental and vision benefits coverage for the Severance Period (i.e., one year) with a portion of the costs of the benefits paid by the executive officer;
  (4) Continued vesting of outstanding cash incentive awards granted to the executive officer that vest and are payable solely contingent upon continued employment and the passage of time, notwithstanding the executive officer’s earlier termination of employment; and
  (5) A “Gross-Up Payment” is made if it is determined that any Internal Revenue Code section 280G parachute payments provided by First Data to or, on behalf of, an eligible executive would be subject to the excise tax imposed by Code section 4999. The Gross-Up Payment is an amount so that after payment of all taxes, the eligible executive retains an amount equal to the excise tax imposed by Code section 4999. However, if it is determined that the executive officer is entitled to a Gross-Up Payment but the payments to the executive officer do not exceed 110% of the amount which is one dollar less than the smallest amount that would give rise to any excise tax, then no Gross-Up Payment will be made and the payments will be reduced so as to not give rise to the excise tax. Executive officers are eligible for this payment regardless of whether their employment is terminated in connection with a Change in Control. However, the provision in the Policy regarding “Gross-Up Payments” will not apply with respect to any payment that would otherwise be subject to the excise tax if such excise tax would be avoided by obtaining stockholder approval of the payment in the manner prescribed by Code Section 280G, which is not applicable to us now following the IPO.

In addition, in the Committee’s sole discretion, executive officers may also be eligible for outplacement services selected by First Data. Under a 2009 agreement with Mr. McCarthy, his amount may not be less than twelve (12) months of salary plus his target bonus current set at $1,750,000.

As a condition to receiving severance payments and benefits under the Policy, all employees are required to release First Data and its affiliates from all claims they may have against them and agree to a number of restrictive covenants which are structured to protect First Data from potential loss of customers or employees and to prohibit the release of confidential company information. Severance payments under the Policy that are not subject to Code Section 409A may be paid in installments or a lump sum payment and severance payments that are subject to Code Section 409A are paid in installments.

 

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We have reserved the right to amend or terminate the Policy at any time in our sole discretion, provided, however, that during the period commencing on the closing of the 2007 merger and ending on the 36 month anniversary of a Change in Control (other than the 2007 merger), we are not permitted to amend or terminate the Policy without the consent of each affected executive officer.

 

Equity Compensation Plan Information

The following table sets forth information regarding equity compensation plans of First Data as of December 31, 2016.

 

Plan Category

        Number of securities      
to be issued
upon  exercise of
outstanding options,
warrants and rights
(a)
    Weighted- average
exercise price of
      outstanding options,      
warrants and rights
(b)
    Number of securities
remaining available
for future issuance
under  equity
compensation plans
      (excluding securities reflected in      
column (a))
(c)
 
Equity compensation plans approved by security
holders (1)
    39,174,107           $ 12.0018           54,522,184  
Equity compensation plans not approved by security holders     —             —            
 

 

 

   

 

 

   

 

 

 

Total

    39,174,107           $ 12.0018           54,522,184  
 

 

 

   

 

 

   

 

 

 

 

  (1) Before our IPO, we granted awards under our 2007 Stock Incentive Plan for Key Employees of First Data Corporation and its Affiliates. Following our IPO, we granted awards under the First Data Corporation 2015 Omnibus Incentive Plan.

 

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Audit Committee Report

The Audit Committee assists the Board in fulfilling its oversight responsibilities with respect to the integrity of First Data’s financial statements, First Data’s compliance with legal and regulatory requirements, the qualifications, performance and independence of First Data’s independent registered public accounting firm, and the performance of First Data’s internal auditing department.

The Audit Committee is responsible for appointing and retaining our independent auditor and approving the audit and non-audit services to be provided by the independent auditor.

Our management is responsible for preparing our financial statements and ensuring they are complete and accurate and prepared in accordance with generally accepted accounting principles. Ernst & Young LLP, our independent registered public accounting firm for 2016, was responsible for performing an independent audit of our consolidated financial statements and expressing an opinion on the conformity of those financial statements with generally accepted accounting principles and as to the effectiveness of our internal control over financial reporting.

The Audit Committee has reviewed and discussed our audited financial statements for the year ended December 31, 2016 with management and with EY. These audited financial statements are included in our Annual Report on Form 10-K for the year ended December 31, 2016.

The Audit Committee has also discussed with EY the matters required to be discussed by Auditing Standard No. 1301 adopted by the Public Company Accounting Oversight Board (United States) regarding “Communication with Audit Committees.”

The Audit Committee also has received and reviewed the written disclosures and the letter from EY required by applicable requirements of the Public Company Accounting Oversight Board regarding EY’s communications with the Audit Committee concerning independence, and has discussed with EY its independence from us.

Based on the Audit Committee’s review and discussions referred to above, the Audit Committee recommended to First Data’s board of directors that First Data’s audited financial statements be included in the annual report on Form 10-K for the fiscal year ended December 31, 2016 for filing with the SEC.

Barbara A. Yastine, Chairperson              

Heidi G. Miller                                           

James E. Nevels                                        

 

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Other Matters

Annual Report

Our 2016 Annual Report to Shareholders, which includes our consolidated financial statements for the fiscal year ended December 31, 2016, is available on our website at www.firstdata.com under “Investors” and “Annual Reports.” Otherwise, please call (212) 266-3565 and a copy will be sent to you without charge. You may also request a free copy of our annual report on Form 10-K for the fiscal year ended December 31, 2016 by writing to First Data Corporation, c/o Investor Relations, 225 Liberty Street, 29th Floor, New York, New York 10281, or e-mail at Peter.Poillon@firstdata.com.

Communications with the Board

An interested party may communicate with the Chairperson of any of the Audit and Governance, Compensation and Nominations Committee, or to the non-management directors or independent directors as a group by writing to First Data Secretary, c/o General Counsel Office, First Data Corporation, 225 Liberty Street, 29th Floor, New York, New York 10281. Communications that are intended specifically for non-management directors should be addressed to the attention of the Chairperson of the Governance, Compensation and Nominations Committee. In general, any shareholder communication about bona fide issues concerning First Data delivered to the First Data Secretary for forwarding to the Board or specified member or members will be forwarded in accordance with the shareholder’s instructions.

Submission of Shareholder Proposals

Shareholders may present proper proposals for inclusion in our proxy statement and for consideration at the 2018 Annual Meeting of Shareholders by submitting their proposals in a timely manner. To be eligible for inclusion in the proxy materials for the 2018 Annual Meeting, a shareholder proposal must be received by our Corporate Secretary by no later than December 1, 2017, and must comply in all respects with applicable rules of the SEC. Shareholder proposals should be addressed to First Data Corporation, c/o Corporate Secretary, 225 Liberty Street, 29th Floor, New York, New York 10281.

A Shareholder may present a proposal not included in our proxy materials from the floor of the 2018 Annual Meeting of Shareholders only if our Corporate Secretary receives notice of the proposal, along with additional information required by our by-laws, between December 16, 2017 and January 15, 2018. Notice should be addressed to First Data Corporation, c/o Corporate Secretary, 225 Liberty Street, 29th Floor, New York, New York 10281.

Delivery of Proxy Materials to Households

SEC rules allow us to deliver a single copy of an annual report and proxy statement to any household at which two or more shareholders reside. We believe this rule benefits everyone. It eliminates duplicate mailings that shareholders living at the same address receive, and it reduces our printing and mailing costs. This rule applies to any annual reports, proxy statements, proxy statements combined with a prospectus and information statements.

 

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First Data Corporation

225 Liberty Street, 29th Floor

New York, NY 10281

VOTE BY INTERNET - www.proxyvote.com

Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time two-days before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.

ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS

If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.

VOTE BY PHONE - 1-800-690-6903

Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time two days before the meeting date. Have your proxy card in hand when you call and then follow the instructions.

VOTE BY MAIL

Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.

 

 

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:

 

  KEEP THIS PORTION FOR YOUR RECORDS
      DETACH AND RETURN THIS PORTION ONLY

THIS   PROXY   CARD   IS   VALID   ONLY   WHEN   SIGNED   AND   DATED.

 

 

The Board of Directors recommends you vote FOR

the following proposal:

 

For

All

 

 

Withhold

All

 

 

For All

Except

 

 

To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below.

 

                                                                 

     

LOGO

   
  1.   Election of Directors                    
   
         Nominees                    
   
 

01   Scott C. Nuttall         02   Joseph J. Plumeri

           
                                          
   
  The Board of Directors recommends you vote FOR the following proposal:   For   Against   Abstain    
                       
 

2.   Ratify the appointment of Ernst & Young LLP as First Data’s independent registered public accounting firm for our fiscal year ending December 31, 2017.

         
                            
 

NOTE: Such other business as may properly come before the meeting or any adjournment thereof.

         
                       
                       
                       
                       
                       
                       
LOGO                        
                       
                       
                       
 

Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer.

 

                                
                              
    Signature [PLEASE SIGN WITHIN BOX]           Date                       Signature (Joint Owners)                          Date            


Table of Contents

 

 

    

 

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice & Proxy Statement and Annual Report are available at www.proxyvote.com.

 

 

          

   
     
   

FIRST DATA CORPORATION

Annual Meeting of Shareholders

April 25, 2017 8:00 AM

This proxy is solicited by the Board of Directors

 

 

            

   

The shareholder(s) hereby appoint(s) Adam L. Rosman and Frank J. Bisignano, or either of them, as proxies, each with the power to appoint (his/her) substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Common stock of FIRST DATA CORPORATION that the shareholder(s) is/are entitled to vote at the Annual Meeting of shareholder(s) to be held at 8:00 AM, ET on April 25, 2017, at The Park Lane Hotel, 36 Central South, New York, New York 10019, and any adjournment or postponement thereof.

   
   

    

   
   

This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors’ recommendations.

   
       
       
       
       
       
LOGO        
       
       
       
       
       
       
       
    Continued and to be signed on reverse side