Are You Willing to Roll the Dice on International Compliance? October 25, 2013

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Sibyl George
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1 Are You Willing to Roll the Dice on International Compliance? October 25, 2013 Jennifer George Director, PwC Sarah Hagberg Senior Manager, Western Union Robert Purser Practice Leader, Reporting Solutions, E*TRADE Corporate Services

2 Disclosure The information contained in this presentation has been prepared by PricewaterhouseCoopers LLP, The Western Union Company and E*TRADE Financial Corporate Services, Inc., each of whom are responsible for their own content. E*TRADE Financial Corporate Services, Inc. does not recommend or endorse these companies or their product and service offerings. The laws, regulations and rulings addressed by the products, services, and publications offered by E*TRADE Financial Corporate Services, Inc. are subject to various interpretations and frequent change. E*TRADE Financial Corporate Services, Inc. does not warrant these products, services, and publications against different interpretations or subsequent changes of laws, regulations and rulings. E*TRADE Financial Corporate Services, Inc. and its affiliates do not provide legal, accounting or tax advice. Always consult your own legal, accounting and tax advisers.

3 Agenda Complexities/ Costs of International Compliance for Global Equity Plans Analyzing Your Options Consequences of Non Compliance Western Union: Company Stats/ Philosophy for Employee Equity Plan Offerings Things to Think About Before Making Grants Making the Grant Ongoing Maintenance Communications to Employees Questions?

4 Complexities/ Costs of International Compliance for Global Equity Plans Each country has its own tax and regulatory rules and different applicable tax rates, withholding rules, etc. These rules can change frequently! Expensive from a time and money perspective to keep up with all these rules and administer global equity plans in compliance with requirements Every company has to make choices about where to spend their resources in offering equity plans globally.

5 Analyzing Your Options Risk versus Reward How much risk are you willing to accept? Cost versus Value Administration burden What do your Participants really want? It might not be the same for every country

6 Consequences of Non Compliance Potentially, fines, penalties, imprisonment, negative press, frozen bank accounts Real Risk?: Depends on country, type of non-compliance and specific circumstances What We Have Seen: Taxes authorities in every country will impose fines, penalties and interest for non/incorrect withholding. Securities authorities in Japan and the Philippines will impose sanctions on not making securities filings for equity plans. Exchange control authorities in China have frozen bank accounts for non compliance with SAFE requirements.

7 The Western Union Company Western Union has been making our customers' lives a little better for more than 160 years: 1851 founded as the New York and Mississippi Valley Printing Telegraph Company s - Western Union first traded under ticker symbol WU Money transfers commenced Western Union spun off from First Data - began trading on the NYSE under the ticker symbol WU. Today: Western Union currently has approximately 9,400 employees in 57 countries. Under it s Long Term Incentive Plan, Western Union offers select employees Restricted Stock Units and Stock Options, which are performance-based for our senior executives. The Company offers equity, or cash-awards in lieu of equity, to Director-level and above. There are approximately 50 mobile employees. We have one stock plan administrator who leads and liaises with a crossfunctional Global Equities team (comprising compensation and benefits, payroll, global mobility and legal).

8 The Western Union Company Philosophy for making equity grants: The Company s long term incentive plan provides employees with an opportunity to participate in the future success of the Company. The Company looks at the business needs necessary to support its various business units including talent acquisition and retention, as well as market practice. The decision to offer (or not offer) equity awards is not static. In line with changing regulatory, tax and compliance concerns, the company s Equity Plan Committee reviews equity grant practices at least annually, and more frequently if necessary. The Company balances these business needs, market practice and regulatory, tax and compliance concerns for 57 countries.

9 Things to Think About Before Making Grants Costs: Cost to Company? Due diligence review? Employer social taxes? Tax/ regulatory filings? Administrative/legal costs? Internal resources? Any way to Structure Equity Awards with Lower Cost? Tax qualified plan? Recharge/ local tax deduction? Alternative types of grants?

10 Things to Think About Before Making Grants Benefits: In line with company philosophy in making grants, i.e., recruiting, retention, etc.? Employee perception?

11 Things to Think About Before Making Grants Other Considerations: Acceptable Risk Level to Company? Market Practices? Legal Presence in Country? Ongoing Costs of Administering?

12 Things To Think About Before Making Grants How Do Companies Weigh These Factors? Do They Just Roll the Dice? Western Union s Practices/ Policies Market Practices

13 Making the Grant Making Tax/ Regulatory Filings Preparing Employee Award Agreements, Tax Summaries and Other Employee Communications Recharge Agreements? Western Union s Practices

14 Ongoing Maintenance: Risk of Rolling the Dice and Not Doing Ongoing Maintenance Annual Due Diligence Review? Ongoing Filing Requirements? Keeping Up with New Developments Risk of Rolling the Dice and Doing Nothing? Western Union s Practices

15 Communications to Employees Obligation to Communicate Grant Terms, Tax Information? Desire to Provide Employees with Certain Information? What Level of Information is Appropriate? Translations? Western Union s Practices

16 Questions?

17 Our Contact Information Jennifer George (408) Sarah Hagberg (720) Robert Purser (678)

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