Establish Risk Governance Committee

2010 – Western Union Company (The)

 

 

WHEREAS: Western Union relies on our Audit Committee to oversee nearly 40 different committee duties including appointing the accounting firm to independently audit the Company and managing that firm’s services, reports, and procedures, assessing the qualifications of the independent audit firm, its lead audit partners and team, assuring that the Securities and Exchange Act of 1934 has not been violated, and confirming the accuracy of the Company’s internal accounting procedures;

 

In addition to these vast responsibilities, our Audit Committee is charged with assessing wide ranging risks to the company.  Our Company’s most recent 10-K identified a multitude of risks to shareholders, including:

 

* Current economic conditions could result in fewer customers making payments to billers;

* Interruptions in migration patterns and declines in job opportunities for migrants will reduce money transfers initiated;

* Our customers tend to have jobs that are more significantly impacted by the current economic condition;

* Regulations by financial and consumer protection laws change quickly, putting our Company (and agents and subagents) at risk of failing to comply, potentially leading to license revocation, civil and criminal penalties;

* Agent dissatisfaction or attrition may lead to fracture of our agent or biller network;

* Agent errors may lead to harm to our reputation and brand name confidence;

* Consumer advocacy groups or governmental agencies could identify our migrant customers as entitled to protection, which could adversely affect our Company;

* Our Company has been the subject of class-action litigation regarding its foreign exchange rate disclosure;

* Competition increases from other money transfer providers;

 

These risks have the potential to negatively impact all aspects of our Company’s reputation and operations, including customer satisfaction and loyalty, our distribution network, market share, revenue, legal action, competitive position and ability of our customers to pay;

 

Because Western Union’s customers are mostly urban and poor, a typical remitter spends a full week's wages just paying for his/her annual transaction costs. With this population in mind, we must remember that brand reputation, transaction cost, and accessibility remain the most important issues to our customer base;

 

Western Union has faced numerous lawsuits based on predatory fees and unfair exchange rates, resulting in millions of shareholder dollars being spent on settlements.  These accusations, coupled with the current global financial crisis, increase the risk our Company faces in the competitive consumer market which may further affect shareholder value.  Controlling these risks is a prime concern for our Company, and therefore a separate Risk Governance Committee is needed;

 

Additionally, congressional legislation, the “Shareholder Bill of Rights Act of 2009,” is currently pending that would require company boards to establish new risk committees with independent directors, which “which shall be responsible for the establishment and evaluation of the risk management practices of the issuer;”

 

RESOLVED: shareholders request that the board form a risk governance committee, independent of the Audit Committee, to fully identify our Company’s risks, to make recommendations on these risks, and to issue periodic reports to shareholders.