8-KLeadership ChangesExhibits & Filings

FISERV INC 8-K Report, Executive Changes (Dec 30, 2009)

Filed December 30, 2009For Securities:FISV

Summary

Fiserv, Inc. (FISV) filed a Form 8-K on December 30, 2009, to report an amendment to the employment agreement of its executive, Jeffery W. Yabuki. The primary purpose of this amendment is to ensure that certain performance-based bonuses payable to Mr. Yabuki under the company's 2007 Omnibus Incentive Plan remain deductible for tax purposes by Fiserv under Section 162(m) of the Internal Revenue Code, following recent IRS guidance. While the amendment is driven by tax deductibility considerations, it notably alters the severance payment structure in the event of a "covered termination." Previously, Mr. Yabuki was entitled to two times his base salary and target bonus. Post-amendment, this payment increases to four and one-half times his then-current base salary, payable as a lump sum. It is important for investors to note that this change affects the severance payout and is directly linked to maintaining corporate tax deductibility for incentive compensation.

Key Highlights

  • 1Fiserv, Inc. amended the employment agreement with executive Jeffery W. Yabuki on December 30, 2009.
  • 2The amendment's core objective is to ensure the deductibility of executive bonuses under Section 162(m) of the Internal Revenue Code.
  • 3This change is a response to recent guidance issued by the Internal Revenue Service.
  • 4The amendment modifies the severance package for Mr. Yabuki in the event of a "covered termination."
  • 5The severance payment increases from two times base salary and target bonus to four and one-half times the current base salary.
  • 6The amendment does not increase the total bonus amounts Mr. Yabuki is eligible to earn, but rather ensures tax deductibility for the company.
  • 7The filing includes Amendment No. 2 to the Amended and Restated Employment Agreement as an exhibit.

Frequently Asked Questions

The primary reason for the amendment is to ensure that bonuses payable to Mr. Yabuki under Fiserv's 2007 Omnibus Incentive Plan continue to be tax-deductible for the company under Section 162(m) of the Internal Revenue Code, in light of recent IRS guidance.

The amendment itself does not increase the total amounts payable to Mr. Yabuki. Its purpose is to preserve the company's ability to deduct certain compensation for tax purposes. However, it does significantly increase the severance payout in the event of a covered termination.

Prior to the amendment, a covered termination would result in a payment of two times Mr. Yabuki's base salary and target bonus. Following the amendment, this payment has increased to a lump sum equal to four and one-half times his then-current base salary.

The filing does not explicitly define 'covered termination.' However, in executive employment agreements, this typically refers to termination of employment under specific circumstances, such as termination by the company without cause, or resignation by the executive for good reason, often related to a change in control or significant adverse changes to the executive's role or compensation.